Gold (XAU/USD) edged lower during early Asian trading hours on Thursday, slipping below the $4,100 mark. The precious metal extended its recent pullback following sharp declines earlier this week as easing tensions between the United States (US) and China reduced safe-haven demand. Meanwhile, traders booked profits ahead of Friday’s key US inflation data, adding to downward pressure.
Market analysts also note that the conclusion of the Diwali festival in India the world’s second-largest consumer of gold could dampen physical demand in the short term, further weighing on prices.
However, gold’s downside may remain limited as broader risk sentiment remains fragile. The ongoing US government shutdown and persistent geopolitical tensions continue to support the metal’s safe-haven appeal. Moreover, growing speculation over potential Federal Reserve (Fed) rate cuts later this year could lend additional support. Lower interest rates typically reduce the opportunity cost of holding non-yielding assets such as gold.
Traders are also closely monitoring developments in US-China trade talks, with senior negotiators expected to meet later this week ahead of a planned summit between Chinese President Xi Jinping and US President Donald Trump in South Korea next week.
The spotlight will turn to Friday’s release of the US September Consumer Price Index (CPI) report — one of the few key data points available amid the ongoing shutdown, which has delayed several major economic releases. A hotter-than-expected inflation print could strengthen the US Dollar (USD) and pressure gold prices in the near term.
Daily market highlights: gold remains in focus amid macro headwinds
- US-China tensions: The Trump administration is reportedly considering new export restrictions on software-driven technologies — including laptops and jet engines — in response to Beijing’s rare earth export limits, according to Reuters.
- Historic rally in 2025: Gold has gained more than 50% year-to-date, marking one of its strongest annual performances on record, surpassing rallies seen after 9/11, the 2008 financial crisis, and the COVID-19 pandemic.
- Government shutdown: The US shutdown has now entered its fourth week with no resolution in sight, making it the second-longest in US history. The Senate is set to vote again on a funding bill, though success remains unlikely.
- Fed policy outlook: LSEG data shows Fed funds futures pricing in a 97% probability of a 25-basis-point rate cut at the next policy meeting.
Trump also confirmed that he expects “something will work out” following an extended meeting with Xi Jinping next week in South Korea.
“The sell-off appears largely technical, with traders locking in profits after an extended overbought period since September. Despite the recent correction, bullion remains up roughly 55% this year, and the broader uptrend remains intact,” said Russell Shor, senior market analyst at tradu.com.
Technical outlook: bullish structure intact above key support
Gold remains in negative territory for the day but maintains a constructive technical outlook as prices continue to hold above the 100-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) stays in bullish territory near 57.25, suggesting underlying strength despite recent pullbacks.
- Immediate resistance: $4,140 (October 15 high); a break above could open the door to $4,330 (October 16 high) and $4,365 (upper Bollinger Band).
- Key support: $4,000 psychological level, followed by $3,947 (October 10 low) and $3,838 (October 3 low).
As long as gold holds above the $4,000 support zone, the broader bullish bias remains intact, with any dips likely to attract fresh buying interest from longer-term investors.
