Three-week low Gold: Fading bullion FOMO and US-China trade optimism dampen safe-haven demand

Gold prices fell to a near three-week low on Tuesday, as hope for a U.S.-China trade deal reduced safe-haven demand ahead of significant central bank policy decisions this week. At 1220 ET, spot gold was at $3,963 per ounce, rebounding from the day's low of $3,886.47.

Over the four months before last week's all-time high, bullion prices increased by more than 30%. Additionally, Bank of America's "Flow Show" report indicated that inflows into gold portfolios during this period surpassed the total inflows recorded over the previous 14 years.

Central bank purchases have also played a crucial role, with China alone adding 39.2 tons to its gold holdings since resuming its market activity last November. This demand could help establish a price floor, as central banks tend to be hesitant to sell their reserves, and countries like China and India, which actively promote gold imports, make it challenging for investors to transfer holdings offshore.

Meanwhile, gold-backed ETFs are drawing in billions of dollars in new investments, with total additions likely exceeding 100 tons over the three months ending in September. This amount is more than three times the average quarterly increase over the past eight years.

Technical Analysis Perspective:

Gold / US Dollar:

·         Gold typically consolidates within a triangle pattern before experiencing a sharp upward breakout.

·         The first triangle formed around September 2024, followed by a breakout in January 2025, triggering a 30% rally over 67 trading days before a consolidation phase began.

·         During consolidation, gold experienced an initial decline of about 11% from high to low over 26 days.

·         The second triangle started forming around April 2025, with a breakout in late August 2025 that led to a 28% rally in 36 trading days before consolidating again last week.

·         Currently, prices have fallen approximately 11.30% from the recent high to low over the past 7 days.

·         Yesterday, spot gold broke below a rising trendline, which now acts as a key resistance level around $4,075 to $4,085.

·         Expect a corrective bounce towards the $4,075 to $4,085 range.

·         A decisive move below $3,887 would open the door to further downside.

Gold Daily chart:

GLD (SPDR Gold Trust) ETF:

·         GLD broke below a rising trendline yesterday, with a downside price gap between 377.50 and 371.

·         This trendline is currently acting as a strong resistance level around 376–377.

·         In the near term, a corrective rally to the 376–377 region is anticipated.

·         A decisive and sustained break below 360 could lead to a further decline towards 355–349.

·         Conversely, a clear breakthrough above 377 would indicate a resumption of the upward trend.

GLD daily chart:

GLD Seasonality:

Since 2006, GLD has posted October rise of 0.8% in 60% of the years, while November has seen a rise of 0.60% in 47% of the years.