Gold Price Forecast - XAU/USD Reclaims $4,000 as Central Bank Buying Fuel Recovery

Gold (XAU/USD) Rebounds Above $4,000 as Traders Brace for Fed Cut and Global Shifts

XAU/USD Climbs After Heavy Selloff as Bulls Defend the $3,900 Zone

Gold (XAU/USD) rebounded to $4,020 per ounce, snapping a three-day losing streak as traders stepped back into the market ahead of the Federal Reserve’s 25 bps rate cut, widely expected to bring the benchmark range to 3.75%–4.00%. The recovery followed a sharp 11% slide from the record high of $4,381 reached on October 20, when bullion hit its strongest level ever amid global tensions and inflation concerns.

Earlier this week, gold slipped to $3,886.60, the lowest since early October, triggering fresh bids from institutional desks and central banks. The rebound to above $4,000 underscores how quickly bargain-hunters emerge whenever bullion dips below that psychological threshold. Short-term resistance now stands at $4,076, $4,125, and $4,192, while strong support remains at $3,900, followed by $3,847–$3,859 and $3,784.

Macro Forces Drive Gold’s Comeback: Fed Policy, Trade Talks, and Inflation Anxiety

The Federal Reserve’s decision later today dominates the market narrative. Traders have fully priced in a 25-basis-point rate cut, with 85% odds of another cut in December. Lower yields typically enhance gold’s appeal as a non-yielding asset. Markets also await signals from Fed Chair Jerome Powell on whether the central bank plans to end quantitative tightening (QT) before year-end — a move that could further weaken the dollar and support commodities.

At the same time, global sentiment is being shaped by the upcoming Trump–Xi Jinping meeting in Seoul, where both leaders are expected to finalize a $350 billion trade and investment framework. Easing trade tensions between the world’s two largest economies could dampen near-term safe-haven demand, but long-term investors see any dip as a buying opportunity given persistent geopolitical risk and structural inflation.

Historic Rally: Gold Up 57% YTD, Outpacing Every Major Asset Class

Even after the late-October correction, gold remains up around 57% year-to-date, rallying from $2,650 in January to $4,028 at the end of October. That performance dwarfs the ~15–20% gains in the S&P 500 and the ~25–30% rise in most commodities this year. The rally is also outpacing Bitcoin’s advance, even as the cryptocurrency trades near $113,000–$120,000.

The rally’s foundations remain intact — global inflation, geopolitical conflict, and aggressive central bank buying. According to Reuters, official purchases have reached multi-decade highs, led by the People’s Bank of China, which has been accumulating gold for 11 consecutive months through September. Together with robust festival-driven demand in India, these flows have tightened global supply and anchored prices above $3,900.

Technical Picture: Bulls Defend Support Ahead of FOMC

From a technical standpoint, XAU/USD has stabilized after breaking out of a descending channel off recent highs. The metal is trading roughly 3.7% above the weekly low, testing resistance at the 38.2% retracement level ($4,076). A daily close above $4,125 — the 10/21 reversal level — would confirm a short-term bottom and potentially accelerate gains toward $4,192 and $4,252.

Conversely, failure to hold $3,900 could expose $3,784, which aligns with the 100% Fibonacci extension of the recent decline. Further weakness below $3,700–$3,720 would threaten the broader uptrend, but for now, momentum indicators show a neutral setup: the 14-day RSI hovers near 50, while the MACD is flattening after oversold readings.

Central Banks and Asia Keep Physical Demand Tight

Physical demand remains resilient across Asia despite volatility. In China, gold continues to trade between $4,000 and $4,300, with limited evidence of selling. MKS PAMP’s Bernard Sin noted that “investors are holding positions amid macro uncertainty and falling real rates.” In India, Diwali and Dhanteras festivities supported seasonal buying, though consumers briefly paused when prices spiked above $4,200.

Meanwhile, central banks continue to diversify reserves. Data show the People’s Bank of China, Reserve Bank of India, and several Middle Eastern sovereign funds have collectively added tens of tons of gold in 2025. Analysts at ANZ highlight that each correction below $4,000 tends to trigger renewed central bank purchases, reinforcing long-term support.

Intermarket Dynamics: Gold Shines Against Equities and the Dollar

Gold’s strength comes even as U.S. equities trade at record highs. The Dow Jones nears 48,000, the S&P 500 at 6,904, and the Nasdaq at 23,951, driven by Nvidia (NASDAQ:NVDA) and Meta (NASDAQ:META) earnings optimism. Historically, such equity surges would cap gold’s upside, but investors appear to be diversifying across both risk and defensive assets simultaneously — a rare occurrence that signals deep macro uncertainty.

The U.S. Dollar Index (DXY) trades near 99.00, recovering slightly from multi-year lows. A stronger dollar typically pressures gold, yet in this cycle, the relationship has weakened due to robust ETF inflows and record global reserve buying. Meanwhile, 10-year Treasury yields hover near 4.00%, suggesting the bond market expects the Fed’s easing cycle to continue well into 2026.

Correlated Assets: Silver, Oil, and Bitcoin Add Context

Silver (XAG/USD) rose 2.8% to $48.35/oz, outperforming gold on a percentage basis, while platinum ($1,616) and palladium ($1,412) followed suit. Energy markets remain subdued, with WTI crude at $60.4 and Brent at $64.6, reflecting stable supply expectations ahead of the OPEC+ meeting.

In the digital space, Bitcoin (BTC-USD) continues to trade between $111,000 and $120,000, holding near record highs as traders view crypto and gold as parallel inflation hedges. The $2 billion outflow from gold ETFs last week has partially rotated into spot Bitcoin ETFs, yet analysts stress that institutional interest in both remains robust.

Analyst Outlook: Diverging Forecasts for 2026

Forecasts for gold diverge widely heading into 2026. HSBC projects a rise toward $4,800–$5,000/oz, citing prolonged inflation and ongoing central bank diversification. Bank of America maintains a similar target near $4,900, while JPMorgan sees potential for $5,055 on average through late 2026, even suggesting $6,000/oz by 2028 if global monetary easing accelerates.

On the bearish side, Capital Economics expects a reversion toward $3,500–$3,800, arguing that the rally outpaced fundamentals. Others, like Goldilocks Research, view the correction as overdue but temporary, calling the pullback a “healthy reset within a long-term bull market.”

Market Psychology: From Fear to FOMO

Market psychology remains critical. After the $4,381 spike, momentum traders rapidly unwound leveraged positions, leading to the steep correction. However, sentiment metrics now show a shift from panic to opportunity. Traders interpret the $3,900–$3,950 zone as an “institutional buy zone,” supported by options data showing heavy call accumulation around $4,200–$4,400.

ETF holdings and CME futures positioning indicate rising long exposure among managed funds, while short interest remains minimal. The CFTC’s latest data show net longs at a three-month high, suggesting professional money managers are re-entering after the shakeout.

Strategic Outlook and Trading Levels

Short-term traders are watching $4,125 as the key pivot. A daily close above that mark could trigger momentum toward $4,192 and $4,252, while a weekly close above $4,252 would confirm a resumption of the broader uptrend toward $4,380–$4,420. Downside risk remains limited as long as prices hold $3,847–$3,859, the median retracement zone that aligns with the October open.

If the Fed delivers a dovish message, gold could reclaim $4,200–$4,250 within days. Conversely, a hawkish tone or stronger dollar could pull prices back toward $3,900 before renewed buying emerges.

TradingNews.com Verdict: BUY (Bullish While Above $3,900 Support)

Gold’s fundamental story remains exceptionally strong: real yields are declining, central banks are net buyers, and geopolitical tensions persist. Technically, XAU/USD has stabilized after a textbook correction, with clear signs of accumulation between $3,880–$3,950.

Unless the Fed delivers a surprise hawkish pivot, gold is positioned for another leg higher toward $4,250–$4,380 in the coming weeks, with potential to challenge $4,600 by early 2026. The risk floor remains $3,780–$3,800.

Verdict: BUY — bullish bias maintained while XAU/USD holds above $3,900; next targets $4,250–$4,380.

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