Gold (XAU/USD) started the new week with a modest intraday uptick, yet remains below the all-time high touched on Friday. The precious metal continues to attract dip-buying, supported by a combination of geopolitical tensions, trade uncertainties, and dovish Federal Reserve expectations.
However, profit-taking and the lingering US-China trade developments have capped its upside for now. In their latest publication, Servelius experts share a thoughtful exploration of the topic.
Market Overview: Support Amid Uncertainties
The start of the week saw Gold edge higher as traders sought safe-haven assets amid persistent trade-related concerns and rising geopolitical risks. Investors are particularly cautious about the ongoing US government shutdown, now in its 20th day, with Republicans and Democrats locked in a standoff over health care funding. Such fiscal and political uncertainties continue to act as a tailwind for Gold.
Meanwhile, dovish expectations surrounding the US Federal Reserve (Fed) further support the non-yielding yellow metal. Traders have fully priced in two 25-basis-point rate cuts for the Fed’s October and December meetings, keeping pressure off the US Dollar (USD) and reinforcing demand for Gold.
USD Dynamics and Fed Rate Cut Bets
Despite a modest bounce in the USD on Friday, Gold maintained a degree of resilience. The market’s full pricing of Fed rate cuts reduces the potential for a strong USD rally, thereby providing indirect support to Gold. Central bank purchases, ETF inflows, and concerns over global fiscal stability add further momentum to the precious metal.
Investors are carefully monitoring macro data and upcoming US consumer inflation figures, due on Friday. With Fed officials in a blackout period ahead of the October FOMC policy meeting, the USD remains particularly sensitive to trade and geopolitical developments, which could directly influence Gold’s near-term trajectory.
Geopolitical Tensions Keep Safe-Haven Demand Intact
Geopolitical developments continue to bolster Gold’s safe-haven appeal. Recent drone strikes in Russia, targeting Gazprom’s gas processing plant and the Novokuibyshevsk oil refinery, have heightened concerns about further escalation in the Russia-Ukraine conflict.
These risks, combined with mounting US government debt, fiscal concerns, and an ongoing government shutdown, reinforce Gold’s role as a defensive asset. While profit-taking around the recent record high has limited immediate upside, the fundamental tailwinds remain intact, keeping traders interested in dip-buying opportunities.
Technical Analysis: Key Support and Resistance Levels
From a technical perspective, Gold displayed resilience near the $4,210-$4,200 support confluence, a zone marked by the 100-hour Simple Moving Average (SMA) and the 38.2% Fibonacci retracement of the October 9-17 rally.
Immediate resistance now lies around the 23.6% Fibonacci retracement at approximately $4,275. A decisive break above this level could open the path toward $4,300, followed by the $4,325 horizontal resistance. Momentum above this area might allow Gold to retest Friday’s all-time high in the $4,379-$4,380 region.
On the downside, Asian session lows near $4,219-$4,218 provide initial support. A breach below the $4,200 round figure and Friday’s swing low at $4,186 could trigger further downside pressure.
Sustained selling under the 50% Fibonacci retracement near $4,163-$4,162 would indicate that Gold has topped out, possibly accelerating losses toward the $4,100 mark, aligning with the 61.8% retracement level and signaling a deeper corrective phase.
Market Sentiment: Cautious but Supportive
Despite favorable fundamental factors, Gold bulls appear non-committed. Comments by the US President on Friday, emphasizing that a full-scale tariff on China would be unsustainable, triggered short-term profit-taking. However, the absence of strong follow-through suggests underlying bullish sentiment remains intact.
Investors continue to weigh the interplay between economic risks, geopolitical volatility, and monetary policy expectations. The combination of fiscal concerns, ETF inflows, and central bank buying is expected to underpin Gold in the near term, particularly if the USD fails to sustain significant gains.
Conclusion: Gold Stalls but Remains Supported
In summary, Gold has struggled to build on its intraday uptick but remains well-supported below the recent record high. Key support levels in the $4,210-$4,200 range have held firm, while resistance near $4,275 will determine whether the commodity can extend gains toward $4,300 and beyond.
Persistent trade uncertainties, escalating geopolitical tensions, and concerns over the US government shutdown continue to act as tailwinds. Meanwhile, expectations of Fed rate cuts, central bank purchases, and strong ETF inflows support ongoing safe-haven demand.
Traders should remain alert to technical breakouts, macro data releases, and geopolitical developments, as these will shape Gold’s next directional move. While profit-taking may limit short-term gains, the combination of fundamental and technical factors keeps the yellow metal in focus for investors seeking stability amid market uncertainty.
