Gold Price Forecast: XAU/USD battling to retain the $4,000 mark

XAU/USD Current price: $4,004.04

• Easing trade war tensions boosted the mood, weighing on the bright metal.
• The Federal Reserve will announce its monetary policy decision next Wednesday.
• XAU/USD struggles to retain the $4,000 mark, room for additional slides.

Spot Gold pierced the $4,000 level on Monday, as a better market mood trashed demand for the safe-haven metal. It currently trades near a fresh 3-week low of $3,971.63.

Relief came from trade-war-related headlines, as United States (US) Treasury Scott Bessent said that top US and China officials had drawn a framework ahead of US President Donald Trump and Chinese leader Xi Jinping meeting later this week. Such a framework, according to Bessent, will prevent fresh US tariffs on Chinese goods, and limit Beijing’s control on rate earths.

Wall Street surged amid confidence in a trade deal and ahead of the Federal Reserve (Fed) monetary policy announcement later this week. The central bank is widely anticipated to trim interest rates by 25 basis points (bps), the second cut in 2025. For companies, lower rates mean lower borrowing costs, hence, firmer stocks gains.

Other than that, the US government shutdown continues, meaning the macroeconomic calendar has little to offer apart from the Federal Open Market Committee (FOMC) decision.

XAU/USD short-term technical outlook

In the 4-hour chart, XAU/USD is currently trading at $4004, down for a second consecutive day. Price action sits beneath the near-term averages, with a bearish 20 Simple Moving Average (SMA) sliding south and now below the 100 SMA, suggesting sellers hold the grip and hinting at additional slides ahead. The 20 SMA stands at $4,085, while the 100 SMA is advancing at $4,109, creating a layered resistance band at $4,085–$4,109. The broader outlook remains underpinned by the rising 200 SMA at $3,927, which acts as the first meaningful support beneath the market, but the inability to reclaim the 20 SMA keeps the short-term tone biased lower.

At the same time, the Momentum indicator remains deeply below the 100 mid-line, aiming higher yet not enough to confirm a steeper recovery ahead. The Relative Strength Index (RSI) indicator hovers at 36, still below the neutral 50 threshold but ticking higher versus the previous close, pointing to fading downside pressure and scope for consolidation. Even so, as long as XAU/USD fails to clear the 20 SMA at $4,085 and the 100 SMA at $4,109, the path of least resistance remains to the downside toward the rising 200 SMA at $3,927. A firm recovery above $4,085–$4,109 would temper the bearish bias and open the door for a more sustained corrective bounce.

In the daily chart, a bullish 20 SMA runs above the current level, providing dynamic resistance at $4,066, while the 100 SMA is bullish, advancing at $3,560. The 200 SMA is also edging higher at $3322, reinforcing the broader positive bias and offering a deeper support level. A sustained break back above the 20 SMA would likely reassert the upward bias and open the door to additional gains.

That said, short-term signals have softened, as the Momentum indicator has accelerated south firmly below its 100 line, flagging increased selling pressure and a corrective tone. The RSI has cooled sharply from prior overbought levels and now hovers at 51, just above the neutral 50 mark, pointing to waning upside traction. While the bearish momentum raises the risk of further dips toward the aforementioned moving-average supports, the rising longer SMAs suggest pullbacks may remain contained. A recovery through $4066 would tilt the near-term bias back to the upside, whereas failure to reclaim it keeps risks skewed toward a deeper test of the 100 SMA at $3560.

(This content was partially created with the help of an AI tool)