Gold (XAU/USD) edges lower on Thursday, after briefly reclaiming the key $4,000 psychological mark amid a weaker US Dollar (USD). At the time of writing, XAU/USD is trading around $3,985, easing from an intraday high of $4,019 as bullish momentum stalls.
Gold’s downside remains cushioned as the ongoing United States (US) government shutdown keeps markets on edge. The political deadlock is raising concerns over the potential economic fallout and weighing on the Greenback after a strong multi-day rally.
However, Bullion’s upside appears limited in the near term as both macro and technical factors could cap further advances. Stronger-than-expected readings from the ADP Employment Change report and ISM Services Purchasing Managers Index (PMI) have reinforced expectations that the Federal Reserve (Fed) may hold off from cutting rates in December.
At the same time, improved market sentiment, reflected in firmer global equities after recent weakness, is discouraging investors from making large bets on Gold. That said, the broader outlook remains constructive amid persistent geopolitical and economic risks.
Market movers: US Dollar eases with focus on shutdown, tariffs and Fed commentary
- The US Dollar Index (DXY), which measures the Greenback’s value against a basket of six major currencies, is trading around 99.91, retreating after briefly climbing to a five-month high of 100.36 on Wednesday.
- Fed Chicago President Austan Goolsbee told CNBC on Thursday that “most labor market indicators show stability,” with only “mild cooling” and “a little downside risk.” He said he “may be reluctant to continue the rate-cutting cycle,” though noted the settling point for rates will be “a fair bit below” current levels.
- The US government shutdown has become the longest in history, surpassing the previous record of 35 days. On Wednesday, US President Donald Trump urged Republicans to do whatever it takes to reopen the government, including considering the abolition of the Senate filibuster.
- The US Supreme Court heard arguments on Wednesday over the legality of President Trump’s use of tariffs under the International Emergency Economic Powers Act (IEEPA). The hearing drew intense scrutiny as several justices, including members of the conservative bloc, questioned whether the 1977 law grants the president authority to impose broad trade measures without congressional approval.
- The World Gold Council’s (WGC) US Gold Demand Trends Q3 2025 report, published on November 5, showed that US gold demand surged 58% YoY to 186 tonnes, driven by record inflows into gold-backed ETFs. US-listed funds added 137 tonnes in Q3, accounting for 62% of global inflows. Trading volumes on COMEX and US ETFs also jumped to a record $208 billion per day in October as Gold notched multiple new highs.
- Separately, the WGC’s Central Bank Gold Statistics report, released on November 4, revealed that central banks recorded net purchases of 39 tonnes in September, marking the strongest monthly total of the year. Brazil led the buying with 15 tonnes, followed by Kazakhstan and Guatemala, lifting year-to-date net buying to 200 tonnes.
Technical analysis: XAU/USD steadies above $4,000, eyes key $4,050 resistance
XAU/USD is edging lower within a familiar range, as bears attempt to reclaim near-term control. The metal is testing the 50-period Simple Moving Average (SMA) on the 4-hour chart.
On the upside, bulls face a tough test at the $4,020-$4,050 resistance zone, which has capped every upside attempt in recent sessions. A clear breakout above this barrier could trigger follow-through buying toward the $4,100-$4,150 region.
On the downside, the 50-period SMA at $3,985 now serves as immediate support. A sustained move below it may invite fresh selling pressure, exposing the $3,900 floor, where repeated dip-buying has previously kept bears in check.
The Relative Strength Index (RSI) has recovered above the 50 midpoint, suggesting improving bullish momentum but still short of signaling a decisive breakout.
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.