Gold Price Forecast: XAU/USD extends its consolidative phase below $4,000

XAU/USD Current price: $3,98

• Encouraging United States private sector data underpinned the US Dollar.
• US Democrats notched victories in multiple states as the shutdown continues.
• XAU/USD consolidates within familiar levels with the risk skew to the downside.

Gold traded within a well-defined range throughout the first half of Wednesday, now hovering around $3,980 per troy ounce in the American session. The lack of a clear catalyst kept investors in cautious mode, although the US Dollar (USD) retained its positive tone across the FX board.

Finally, the United States (US) released the ADP Employment Change survey, which showed that the private sector added 42,000 new job positions in October, better than the upwardly revised -29,000 posted in September.

Additionally, the ISM Services Purchasing Managers’ Index (PMI) improved to 52.4 in October, much better than the previous 50 or the expected 50.8. Upon closer examination, the Prices Paid Index, which tracks inflation, increased to 70.0 from 69.4, while the Employment Index rose to 48.2 from 47.2. Finally, the New Orders Index rose to 56.2, from 50.4.

Aside from that, speculative interest kept a close eye on the US elections. Democrats notched victories in multiple states, not good news for President Donald Trump, who blamed GOP losses on the ongoing shutdown. Indeed, California, Virginia, and most likely New Jersey have new Democratic governors, while New York City voted for progressive Zohran Mamdani and his affordability platform.

Meanwhile, Wall Street reversed Tuesday’s losses, and the three major indexes trade in the green after the positive surprise provided by data, although gains are modest. Overall, market players seem cautiously optimistic and willing to continue betting on the Greenback.

XAU/USD short-term technical outlook

In the 4-hour chart, the XAU/USD pair is currently trading at around $3,980, up $19 for the day. From a technical point of view, a bearish 20 Simple Moving Average (SMA) at $3,986 contained advances, while converging with a marginally bullish 200 SMA, the latter at $3,996. Further up, the 100 SMA acts as resistance at $4,095.Technical indicators, in the meantime, reflect the lack of directional strength. The Momentum indicator recovered but remains below its midline, while the Relative Strength Index (RSI) indicator holds flat at 48.

In the daily chart, the XAU/USD is developing below the 20-day Simple Moving Average, which currently stands at $4,084. However, the pair is above the longer ones with the 100-day SMA at $3,602 and the 200-day SMA at $3,365 acting as mid-term dynamic supports. At the same time, the Momentum indicator plunged below its midline, and maintaining its downward strength, while the RSI indicator remains directionless at around its 50 level, skewing the risk to the downside without confirming an imminent slide.

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