By Antonio Di Giacomo, Senior Market Analyst at XS.com
Gold prices continue to trade below $4,100 per ounce, reflecting optimism in global equity markets and a stronger U.S. dollar. The solid risk appetite has temporarily reduced the need for safe-haven assets such as XAU/USD, which remains confined to a narrow range as it awaits new macroeconomic catalysts.
One of the main drivers behind this weakness is the renewed momentum in global stock markets, supported by improved corporate earnings prospects and a financial backdrop that, although uncertain, still maintains the narrative of a soft landing in the
United States. This context shifts defensive demand toward higher-yielding assets, reducing gold’s traction.
On the macroeconomic front, investors remain focused on the September Nonfarm Payrolls (NFP) report, which was delayed by the prolonged U.S. government shutdown. The delay has generated caution among traders, who prefer to avoid aggressive positioning in an environment with limited economic visibility. The absence of official data also complicates understanding of labor-market conditions, a key factor in determining the Federal Reserve’s next move.
Recent FOMC minutes reinforced the central bank’s hawkish tone. Several members supported keeping rates higher for longer to manage persistent inflation risks, reducing the probability of a rate cut in December. This stance strengthened the dollar to multi-month highs, adding pressure on gold, which tends to weaken when the dollar appreciates and real yields remain elevated.
However, some factors could limit a more profound decline in the metal. The prolonged government shutdown has produced signs of economic slowdown that could restrain further monetary tightening. Cyclical sectors such as manufacturing and real estate have shown recent weakness, opening the door for the Federal Reserve to soften its tone in future meetings if the deterioration continues.
On the geopolitical front, a reported peace plan promoted by Donald Trump for the Russia-Ukraine conflict, along with a high-level visit by U.S. officials to Kyiv, has temporarily boosted investor optimism. This development has reduced safe-haven demand, adding further pressure on gold, which tends to retreat during periods of improved diplomatic stability.
Despite the bearish backdrop, some analysts note that gold’s technical structure still shows key support zones that could halt additional declines. The area between $4,000 and $3,900 per ounce remains the most relevant psychological level to determine whether the downtrend will continue or if a technical rebound could emerge, supported by potential dollar weakness.
In conclusion, gold faces a challenging environment marked by a strong dollar, expectations of higher rates for longer, and renewed optimism in global markets.
However, the uncertainty created by the U.S. government shutdown, the economic slowdown, and geopolitical risks leaves the door open for a short-term rebound. The metal’s performance will largely depend on upcoming labor-market data and the tone the Federal Reserve adopts in its communications from December onward.