**Gold (XAU/USD) Faces Bearish Pressure Amid Fed Caution and Trade Optimism**
Gold continued to experience bearish momentum, slipping to its weakest level since early October by falling below the $4,000 mark. The precious metal was pressured by cautious remarks from Federal Reserve (Fed) Chairman Jerome Powell concerning policy easing, as well as a de-escalation in the US-China trade conflict. Looking ahead, upcoming US macroeconomic data releases and comments from Fed officials are expected to influence gold’s valuation in the near term.
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### Gold Extends Correction from Record High
Gold started the week under heavy bearish pressure, losing more than 3% on Monday. Increased optimism about a potential trade truce between the US and China encouraged risk appetite across markets, which reduced demand for Gold as a safe haven asset.
As President Trump signed framework trade agreements with multiple nations—including South Korea—during his Asia tour, gold remained under pressure. This led it to drop to its lowest level since early October, falling below $3,900 on Tuesday.
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### Mixed Trading Sessions and Fed Policy Developments
After attempting a recovery in the first half of Wednesday, gold prices reversed sharply during the American session, closing lower for the fourth consecutive day.
At the October policy meeting, the Fed cut its policy rate by 25 basis points (bps) to a range of 3.75%–4%, as anticipated. The central bank also announced that it would conclude its aggregate balance sheet drawdown on December 1.
During the post-meeting press conference, Fed Chair Jerome Powell emphasized that another rate cut in December is “far from assured.” He noted that the employment and inflation outlooks had not changed significantly since the September meeting. Powell reiterated the Fed’s commitment to managing the risk of more persistent inflation.
Following Powell’s cautious remarks on policy easing, the benchmark 10-year US Treasury bond yield climbed above 4%, while the US Dollar (USD) strengthened—both factors negatively impacting XAU/USD.
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### Gold Rebounds Amid Risk Sentiment Shift
On Thursday, the shift in risk sentiment allowed gold to stage a modest rebound. After recovering above $4,000, the precious metal entered a consolidation phase on Friday.
The US economic calendar is set to feature several important macroeconomic data releases that could provide insights into labor market conditions and the overall economic outlook, especially considering some earlier releases were postponed or canceled due to the ongoing government shutdown.
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### Key Upcoming Economic Data and Fed Comments
– **Monday:** The Institute for Supply Management (ISM) will publish the Manufacturing Purchasing Managers’ Index (PMI) for October. A strong improvement in the headline PMI or its Employment component could boost the USD and push XAU/USD lower.
– **Wednesday:** Automatic Data Processing (ADP) will release private sector payroll data for October. Earlier in the week, ADP reported an average increase of 14,250 jobs over the four weeks ending October 11 and announced plans to start publishing a weekly preliminary estimate reflecting a four-week moving average of private sector employment changes. This could result in a muted market reaction to the upcoming ADP figures.
Later Wednesday, the ISM Services PMI data for October will be released. A better-than-forecast headline PMI, combined with a noticeable recovery in the Employment component, is expected to strengthen the USD and weigh on gold prices, with the inverse also holding true.
Investors will also closely monitor comments from Fed officials in the coming days. According to the CME FedWatch Tool, the probability of an additional Fed rate cut in December has declined below 70% (as of Friday) from 90% prior to the October meeting.
Should policymakers maintain a cautious stance similar to Powell’s—refraining from a clear commitment to further rate reductions—the USD could strengthen further alongside rising Treasury yields, potentially pushing gold prices lower.
Conversely, if Fed officials signal a continued willingness to ease monetary policy unless inflation driven by tariffs intensifies, gold could find support and hold its ground.
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### Gold Technical Analysis
On the daily chart, the Relative Strength Index (RSI) remains near the neutral 50 level. Gold continues to trade below its 20-day Simple Moving Average (SMA), yet it is holding within the upper half of an ascending regression channel that has been in place since the beginning of the year.
**Support levels to watch:**
– $3,970 — Fibonacci 38.2% retracement of the August-October rally (interim support)
– $3,900 — Mid-point of the ascending channel and key round figure
– $3,850–$3,820 — Fibonacci 50% retracement and 50-day SMA zone
**Resistance levels to monitor:**
– $4,090 — 20-day SMA; a key level for confirming bullish momentum
– $4,130 — Fibonacci 23.6% retracement
– $4,200 — Psychological round number
A sustained move above $4,090 could help gold regain ground and target higher resistance levels, while failure to hold support levels may signal further downside pressure.
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**In summary,** gold remains vulnerable amid cautious Fed messaging and improving trade relations, but upcoming economic data and Fed official comments have the potential to sway its near-term direction. Investors should monitor these developments closely to gauge Gold’s evolving outlook.
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