Gold (XAU/USD) started the week under pressure, sliding nearly 3% to around $3,985 and marking a two-week low as improving risk sentiment curbed demand for safe-haven assets. The metal continues its retreat from last week’s record high of $4,381, with profit-taking accelerating amid signs of progress in global trade talks.
Risk-on sentiment weighs on safe havens
Optimism in global markets strengthened after reports that the United States and China reached a preliminary trade framework over the weekend, setting the stage for further negotiations ahead of Thursday’s meeting between President Donald Trump and Chinese President Xi Jinping. In addition, Trump signed separate trade cooperation pacts with Malaysia, Thailand, Vietnam, and Cambodia, reinforcing a more constructive trade environment across Asia.
Although risk appetite has improved, investors remain cautious as focus turns to a series of major central-bank meetings this week, including the Federal Reserve (Fed), Bank of Canada (BoC), Bank of Japan (BoJ), and European Central Bank (ECB). While trade optimism provides near-term relief, lingering uncertainty around President Trump’s trade policy and the ongoing US government shutdown continue to pose downside risks to market sentiment.
US-China trade progress and government shutdown dominate headlines
According to statements from top negotiators, both the US and China agreed on key elements of a trade framework, including a potential extension of the current tariff truce, cooperation on fentanyl control, and deals on agricultural trade, export controls, and shipping levies.
US Treasury Secretary Scott Bessent confirmed that China will defer new rare-earth export restrictions for one year and commit to “substantial” purchases of US soybeans. He added that the threat of 100% tariffs on Chinese goods is now “effectively off the table,” paving the way for a productive meeting between Trump and Xi at this week’s APEC summit in South Korea.
Meanwhile, the US government shutdown entered its 27th day with no resolution in sight. The standoff—one of the longest in US history—has left over 700,000 federal employees furloughed or working without pay. The Department of Agriculture warned that major food assistance programs, including SNAP and WIC, could be suspended from November 1 if funding is not restored.
Markets expect Fed rate cut amid easing inflation
On the monetary policy front, traders are almost fully pricing in another 25-basis-point (bps) rate cut at the Fed’s October 29–30 meeting, with the CME FedWatch Tool showing a 96.7% probability.
Markets also expect a further cut in December, as softer September inflation data strengthened the case for additional easing. Lower interest rates typically enhance the appeal of non-yielding assets like gold by reducing the opportunity cost of holding them.
Technical outlook: XAU/USD vulnerable below $4,100
Gold remains under bearish pressure as prices struggle to reclaim the key $4,000 psychological level. The metal continues to trade below its 50- and 100-period Simple Moving Averages (SMAs) at $4,187 and $4,107 respectively, signaling that sellers maintain control.
Immediate support lies near $4,000, where buyers may attempt to stabilize prices, but momentum remains weak. A clear break below this level could trigger further declines toward $3,950 and $3,900. On the upside, initial resistance is seen between $4,100 and $4,150, followed by a stronger barrier near $4,200 the previous breakout zone likely to attract renewed selling interest.
The Relative Strength Index (RSI) sits around 37, hovering near oversold territory and suggesting that bearish momentum remains dominant in the short term.
