Gold (XAU/USD) edged lower on Friday, falling back below the $4,000 mark as investors reassessed the Federal Reserve’s (Fed) policy outlook following this week’s rate cut. At the time of writing, the precious metal trades near $3,985 — down about 1% on the day — and is on track for its second consecutive weekly loss.
A stronger US Dollar (USD) and steady Treasury yields continue to limit upside momentum in Gold, as traders scale back expectations for additional rate cuts this year. In his post-meeting remarks, Fed Chair Jerome Powell signaled that a December rate cut is “not a foregone conclusion,” reaffirming the Fed’s data-dependent stance.
Improved risk sentiment has also reduced demand for safe-haven assets after the closely watched meeting between US President Donald Trump and Chinese President Xi Jinping ended with a provisional trade truce. The agreement offered short-term relief following recent trade tensions between the world’s two largest economies.
Market drivers: Fed outlook, trade truce, and US shutdown
The US Dollar Index (DXY), which tracks the Greenback’s performance against six major currencies, remains near 99.70 after hitting a three-month high on Thursday. Treasury yields have also risen across the curve, with the 10-year yield up nearly 30 basis points since Wednesday, reaching a three-week peak near 4.11%.
According to the CME FedWatch tool, market odds of a 25-basis-point rate cut in December have dropped from about 91.7% a week ago to roughly 66.8%, reflecting a more cautious policy outlook. Meanwhile, the Trump–Xi meeting on the sidelines of the APEC Summit in South Korea produced a one-year trade truce until November 2026. Under the deal, the US will halve its fentanyl-related tariff to 10%, while China will remove 10–15% retaliatory duties on select US agricultural goods and delay its planned export controls on rare-earth materials.
Adding to uncertainty, the ongoing US government shutdown has now entered its fifth week, with little progress toward resolution. The Senate is scheduled to reconvene on Monday, but negotiations remain gridlocked despite President Trump urging Republicans to end the filibuster and push through funding measures. The prolonged closure is delaying key economic data releases and raising concerns over near-term growth prospects.
Looking ahead, next week’s slate of US economic data including the ISM Manufacturing PMI, JOLTS Job Openings, ADP Employment Change, Challenger Job Cuts, and the University of Michigan sentiment index will offer fresh insight into labor market health and inflation expectations.
Technical analysis: Gold consolidates below $4,050 resistance
XAU/USD appears to be consolidating after a strong rally and a subsequent corrective pullback, suggesting a potential accumulation phase before the next directional move.
On the 4-hour chart, the metal faces immediate resistance at $4,020–$4,050, a former support zone now acting as resistance. A sustained break above this region could pave the way toward $4,100–$4,150, though sellers are likely to re-emerge unless a clear breakout occurs.
On the downside, the 21-period Simple Moving Average (SMA) near $3,980 provides short-term support. A decisive break below this level would expose the $3,900 pivot a key area of demand. A drop beneath $3,900 would reinforce the case for a deeper correction. Meanwhile, the Relative Strength Index (RSI) sits near the 50 mark, indicating neutral momentum and suggesting range-bound trading in the near term.
