By Linh Tran, Market Analyst at XS.com
The gold market is entering a challenging yet opportunity-filled phase as the global economic Gold prices are entering a corrective phase as pressure from a stronger USD and rising U.S. Treasury yields returns, especially after a series of hawkish remarks from Fed officials that lowered market expectations for a potential rate cut in December.
The USD Index is holding around 99.1 points while the 10-year U.S. Treasury yield has rebounded to 4.14%, creating direct pressure on gold. Tighter financial conditions have caused defensive capital to temporarily move away from the precious metal, pulling gold back toward the key psychological zone around 4,000 USD/oz.
However, behind this short-term decline lies a relatively solid fundamental foundation for gold in the medium and long term.
The global economic landscape is showing several concerning signs of slowdown. Japan and Switzerland both recorded noticeably weaker GDP growth in Q3, partly reflecting pressure from U.S. trade tariffs as well as the overall weakening of export–import activity. These signals suggest that the global growth cycle may be slowing faster than expected, which could gradually increase demand for safe-haven assets and defensive allocation over time.
In addition, institutional capital flows provide another notable layer of support. The World Gold Council’s Gold Demand Trends Q3/2025 report recorded global gold demand at 1,313 tonnes, the highest quarterly level in history. Global ETF inflows surged by +222 tonnes, while central banks continued net purchases of 220 tonnes, up 28% from the previous quarter. In the U.S., gold ETFs absorbed 137 tonnes of inflows in Q3 alone, accounting for up to 62% of global ETF flows. This reflects a clear shift from traditional physical gold toward financial gold, especially in a context where inflation remains not fully controlled and Fed policy uncertainty remains high.
Furthermore, geopolitical tensions and global trade uncertainties continue to provide important support. The conflict in the Middle East shows no signs of easing, while the U.S.’s new tariff policies on China, Japan, and Europe increase supply-chain risks and elevate defensive demand. And the U.S.–China trade agreement under discussion does not necessarily represent a complete end to trade tensions. High global sovereign debt continues to encourage central banks to diversify their reserves.
In this context, I believe the current correction in gold may be more technical than indicative of a trend reversal. Although in the short term, gold remains under pressure from a strong USD and higher yields—and may continue to trade below the 4,020 USD/oz zone until markets absorb this week’s key U.S. data such as the FOMC minutes, PMI, and the labor report—looking further into the medium term, strong ETF flows, rising central bank demand, and a slowing global economy suggest that gold still has the potential to resume its upward trend once the corrective phase is complete.
In the long term, gold’s bullish cycle remains supported by factors such as U.S. public debt exceeding 38 trillion USD, expanding geopolitical risks, supply-chain instability, and a delayed monetary easing cycle. These are elements that can maintain strong demand for gold and provide meaningful support for the metal.
Gold faces short-term downside pressure, but the medium- and long-term outlook remains positive. The 4,000 USD/oz zone continues to be a key level for assessing market reaction and will likely serve as a strong absorption area if this week’s data releases do not include any major negative surprises.