Gold Price Forecast – XAU/USD Drops to $4,031 as Dollar Strengthens, Support Seen at $3,950

Gold (XAU/USD) Extends Its Slide as Stronger Dollar and Hawkish Fed Tighten the Grip

Gold (XAU/USD) extended losses for a fourth consecutive session, falling to $4,031 per ounce, pressured by a surging U.S. dollar, hawkish Federal Reserve rhetoric, and broad risk reduction across global markets. From last week’s high of $4,245, the metal has lost over 4.5%, with traders de-risking ahead of Nvidia’s (NASDAQ: NVDA) earnings and Friday’s U.S. Non-Farm Payrolls (NFP) report.
The metal remains up 53.7% year-to-date, on track for its strongest annual performance since 1979, but short-term sentiment has deteriorated sharply. Renewed dollar demand—bolstered by higher Treasury yields—has made bullion more expensive for non-U.S. buyers, pulling spot prices closer to the $4,000 psychological level.

Dollar Surge and Fed Policy Repricing Challenge Gold’s Appeal

The U.S. Dollar Index (DXY) rebounded toward 97.10, marking its third consecutive daily gain. That move coincided with a sharp repricing in interest-rate expectations: markets now assign only a 45% probability of a 25-bps Fed cut in December, down from more than 60% last week, according to CME FedWatch.
Officials including Atlanta Fed President Raphael Bostic, Kansas City Fed President Jeff Schmid, and Governor Christopher Waller reiterated their cautious stance, warning against premature easing. Waller noted signs of “labour market stall speed,” but his dovish tone failed to arrest the dollar rally. The result has been a compression in gold’s risk premium, as higher real yields restore the appeal of dollar assets.

XAU/USD Technical Picture: Correction Not Reversal but $3,950 Looms

Technically, gold’s fall from its October 21 record of $4,381 resembles a corrective phase rather than a full-scale reversal. Analysts identify two completed corrective legs (A and B) and anticipate a third wave (C) that could push XAU/USD toward $3,950–$3,880, below the October 28 low of $3,886.
Support levels are clustered at $3,990, $3,945, and $3,880, while resistance caps upside at $4,070, $4,130, and $4,200. The 50-day EMA, now rising near $3,953, remains a key inflection zone. A sustained break below that line would expose the 200-day EMA near $3,500. Momentum indicators confirm bearish control—the RSI hovers just above 40 and the MACD has turned decisively lower.

Market Dynamics: Government Reopening Removes Bullion Tailwinds

The reopening of the U.S. government after its six-week shutdown has removed a key support that previously drove gold to all-time highs. During the closure, delayed data releases amplified economic uncertainty and pushed investors into defensive assets. With normal reporting resuming, traders have turned back to macro fundamentals.
The upcoming September employment report and Fed meeting minutes are pivotal. Policymakers’ last 0.25% rate cut divided the committee, and markets now see less than a 50% chance of further easing this year. That recalibration has effectively capped gold’s upside momentum above $4,150.

Asian and Emerging Demand: China’s Central Bank Extends Reserve Build

Physical demand has provided a floor under spot prices. China’s central bank added 15 tons of gold reserves in September, lifting total holdings to 2,262 tons—its 12th consecutive monthly increase. This structural buying underscores gold’s strategic role as a hedge against currency volatility and geopolitical stress.
In India and Thailand, retail demand remains steady despite higher rupee and baht prices. Thai markets reported local gold down 1,150 baht per baht-weight on November 15 after spot fell to $4,019, while premiums in Shanghai held near $28/oz, reflecting persistent regional tightness.

Global Macro Crosscurrents: Liquidity Tension and Risk Deleveraging

Broader deleveraging across asset classes has amplified gold’s short-term weakness. Investors are unwinding positions in equities, credit, and commodities ahead of key data, creating synchronized selling pressure. Persistent concerns about private-credit exposure and tightening dollar liquidity have magnified risk aversion.
Despite these flows, gold’s macro backdrop remains constructive. Global fiscal deficits are swelling, and central-bank diversification into non-dollar assets continues at a record pace. Analysts at Scotiabank project an average price of $3,800/oz in 2026, up from $3,450 this year, citing enduring uncertainty and eventual declines in real yields.

FX Impact: Stronger Dollar Caps Rebounds, but Fed Pivot Could Trigger Snap Rally

Gold’s tight inverse correlation with the dollar remains decisive. Spot rebounded modestly to $4,049.21 early Tuesday in Singapore trade as the Bloomberg Dollar Spot Index slipped 0.3%, but gains proved fragile. Traders are keenly watching for a Fed pivot or soft employment data that could reignite easing bets.
A dovish shift could push XAU/USD back toward $4,200–$4,250, but sustained strength above that range would require clear confirmation of declining inflation and weaker growth. Until then, rallies are likely to meet profit-taking pressure near previous supply zones.

Technical Trading Range: Key Levels and Sentiment Indicators

Market technicians identify $4,000 as a pivotal psychological anchor. The metal has oscillated around this level for over ten sessions, establishing what some describe as “market memory.” Immediate downside targets sit at $3,950 and $3,880, while the ceiling near $4,200 marks the line between correction and recovery.
Sentiment remains fragile. The 14-day RSI reset from 62 to 41, the Stochastic oscillator turned negative, and ADX readings above 30 signal a strengthening downtrend. However, open-interest data suggest no mass liquidation, implying that positioning remains moderate—an early indicator that large funds may be waiting for capitulation levels before re-entering.

Outlook for Central Bank and ETF Demand: Diverging Paths

While official-sector purchases stay robust, investment-fund demand has cooled. Global gold ETFs recorded net outflows of 28 tons in October, breaking a three-month inflow streak. The shift reflects tactical reallocations rather than structural weakness, as real yields remain volatile.
On the flip side, central-bank buying is approaching record highs. Combined purchases by China, Turkey, and Poland exceeded 30 tons last month, with smaller economies following suit. This sustained official-sector demand supports long-term equilibrium near $3,900–$4,100, even as speculative flows oscillate.

Comparative Asset Flows: Silver, Platinum, and U.S. Dollar Movements

Silver mirrored gold’s weakness early in the week but outperformed slightly on rebound, up 1.5% to $30.42/oz, while platinum advanced 0.5% to $1,056/oz and palladium gained nearly 1.2%. The divergence highlights differing industrial demand profiles—precious-metal markets are reacting less uniformly as macro pressures evolve.
Meanwhile, U.S. yields stabilized near 4.11% on the 10-year Treasury, while risk-off flows lifted the greenback across Asia. The yen slid to 151.45/USD, and the euro hovered at 1.065, both reflecting dollar dominance that continues to restrain metals.

Trading Strategies: Dip-Buying With Tight Risk Control

Short-term traders are targeting sell zones between $4,115–$4,120 with downside objectives at $3,980 and stop losses near $4,170. Conversely, dip-buyers eye entries around $3,960 aiming for rebounds toward $4,150, maintaining stops below $3,920. The prevailing strategy remains “buy on strong dips” without excessive leverage—a reflection of cautious optimism amid macro noise.

TradingNews Verdict: Short-Term Bearish, Long-Term Bullish Hold Bias on XAU/USD

Gold’s structural bull trend remains intact, underpinned by central-bank accumulation and long-term inflation hedging, but short-term dynamics point to continued weakness. The combination of a stronger dollar, reduced Fed-cut expectations, and technical pressure near $4,000 supports a short-term SELL bias.
However, the absence of capitulation selling, solid sovereign demand, and stable macro fundamentals justify a medium-term HOLD and a long-term BUY outlook toward $4,400–$4,500 once rate-cut momentum resumes.

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