Gold (XAU/USD) kicks off the week on a cautious footing, oscillating within its established $3,900-$4,050 range as traders weigh an evolving macroeconomic backdrop. At the time of writing, XAU/USD is trading around $4,010 after briefly slipping to $3,962 earlier in the Asian session.
Gold struggles to attract follow-through buying as the US Dollar (USD) remains broadly supported by the Federal Reserve’s (Fed) hawkish tilt. The central bank lowered interest rates by 25-basis-points (bps) at last week’s Federal Open Market Committee (FOMC) meeting but signaled that further easing this year is unlikely. This stance has lifted the Greenback across the board, with traders scaling back expectations of another rate cut in December.
At the same time, improving risk appetite and firmer global equities limit Bullion’s upside potential. The de-escalation in the US-China trade conflict has reduced demand for traditional safe-haven assets for now. However, the broader trend still tilts to the upside, underpinned by sustained institutional demand and persistent geopolitical and economic uncertainty that continue to anchor long-term support for the precious metal.
Market movers: China tax shift, ISM PMI steer early-week sentiment
- Gold came under brief pressure after reports that China’s Ministry of Finance reduced the value-added tax (VAT) exemption on gold purchased via the Shanghai Gold Exchange and the Shanghai Futures Exchange from 13% to 6%, effective November 1, 2025. Analysts at ANZ Research said investors in China were “disappointed” by the new rule, which removes a key tax advantage that had long supported gold trading activity.
- On the trade front, the White House announced on Saturday a framework deal under which China will ease export restrictions on rare earths and suspend investigations into US semiconductor firms. In return, Washington will extend a pause on certain tariffs, including a previously planned 100% levy on Chinese goods. The announcement follows last week’s meeting between US President Donald Trump and Chinese President Xi Jinping at the APEC Summit in South Korea, where both leaders agreed to a one-year trade truce lasting until November 2026.
- The Supreme Court will begin hearings on Wednesday on the legality of President Donald Trump’s use of emergency powers to impose tariffs under the IEEPA. Two lower courts have already ruled these tariffs illegal, and the outcome could determine the future scope of presidential authority over trade policy.
- The United States (US) government shutdown entered its thirty-third day with no breakthrough in sight, and is on track to surpass the previous record of thirty-five days if the stalemate continues. Senators are due to reconvene later Monday as the funding impasse continues to delay key economic data releases and stoke concerns over the broader economic impact.
- Fed Governor Stephen Miran cautioned on Monday that it is “a mistake to make conclusions about monetary policy from financial conditions alone.” Miran said the central bank could “get to neutral in a series of 50-basis-point cuts but does not need 75-basis-point cuts,” emphasizing that the “economy is not dysfunctional.” He further noted that “changes in the neutral rate mean policy has passively tightened despite Fed cuts.”
- Investors turn to private data amid US shutdown-driven data drought. According to the Institute for Supply Management (ISM), the October Manufacturing PMI slipped to 48.7, down from 49.1 in September and below the consensus forecast of 49.5. Later in the week, focus shifts to JOLTS Job Openings, ADP Employment Change, ISM Services PMI, Challenger Job Cuts and the University of Michigan Sentiment Survey.
Technical analysis: XAU/USD holds steady near $4,000 amid neutral momentum
Gold lacks clear directional momentum, trading within a narrow range and stuck between key short-term moving averages on the 4-hour chart. The 50-period Simple Moving Average (SMA), near $4,026, continues to cap the upside and aligns with a former support-turned-resistance zone around $4,020-$4,050.
On the downside, the 21-period SMA at $3,996 offers immediate support. A break below this level could expose the $3,900 area, where dip-buying interest is likely to re-emerge.
Conversely, a decisive move above the confluence of the 50-SMA and horizontal resistance would open the door toward the $4,100-$4,150 region. The Relative Strength Index (RSI) stands at 49, reflecting a neutral bias and confirming the market’s lack of conviction in either direction.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Source: https://www.fxstreet.com/news/gold-trades-steady-near-4-000-as-firm-us-dollar-and-risk-on-mood-limit-upside-202511031203
