Gold Price Forecast: XAU/USD sees dip-buying after sell-off, looks to US-China trade updates

Gold bounces off key support near $4,000 as the profit-taking decline stalls early Wednesday.
US Dollar reverses Tuesday’s upswing as traders await the US-China trade talks, geopolitical updates.
Gold’s bullish trend remains intact as the daily RSI remains above the 50 level, despite the recent steep drop.

Dhwani Mehta FXStreet

Gold is attempting a recovery above the $4,100 mark early Wednesday, after having reversed a further sell-off to near the key $4,000 support. Gold buyers fight back control, awaiting fresh developments on the US-China trade front.

Gold was down but not yet out

Gold is licking its wounds following the intense volatility witnessed so far this week.

Having lost over 5% on Tuesday, Gold gave away another $125 in the early Asian trading hours, but bargain hunters quickly jumped in at lower levels, driving the bright metal back to near $4,100 threshold.

Tuesday’s $230 correction was mainly due to profit-taking as the record-setting rally was overdone. Traders resorted to cashing in on their long positions amid easing US-China trade tensions as US President Donald Trump touted a fair deal with China when he meets his counterpart Xi Jinping in South Korea next week.

Meanwhile, markets also eagerly awaited the trade discussions between US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng in Malaysia to de-escalate the renewed trade tensions.

The sell-off in Gold was also sparked by an intense buying wave in the US Dollar (USD), courtesy of a sharp rally in the USD/JPY pair. The Japanese Yen (JPY) faced strong headwinds after Sanae Takaichi was elected as Japan's Prime Minister. An expansionary era in Japan is likely to return, with Takaichi at the top, which weighed on the JPY while boosting USD/JPY.

Looking ahead, all eyes remain on fresh developments surrounding the US-China trade talks, with the US government shutdown still in place and a meeting between Trump and Russian President Vladimir Putin called off.

Gold price technical analysis: Daily chart

Gold tested the critical support in the area $4,007-$3,973, where the 21-day Simple Moving Average (SMA) and the 38.2% Fibonacci Retracement level of the parabolic rise from mid-August align.

Buyers need to recapture the 23.6% Fibo support-turned-resistance at $4,129 to sustain the rebound toward all-time highs of $4,382.

Ahead of that level, the $4,300 round figure needs to be taken out.

The 14-day Relative Strength Index (RSI) has paused its pullback from the extreme overbought zone to trade near 59, as of writing.

The leading indicator suggests that the longer-term bullish potential in Gold remains intact.

On the flip side, if the aforesaid confluence support zone at around $4,000 gives way, a steeper correction could unfold toward the 50% Fibo level at $3,847.

The line in the sand for Gold buyers is seen at the 61.8% Fibo, the Golden Ratio, at $3,722. The 50-day SMA coincides at that level, making it a powerful downside cap.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY approaches 158.00 as Japanese Yen resumes decline

USD/JPY is resuming its upside in the European session on Friday, refreshing two-week highs and nearing 158.00. The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.

Gold keeps the bid tone in place; still below $4,400

Gold adds to the optimism seen in the second half of the week, trading with decent gains just below the $4,400 mark per troy ounce on Friday. The precious metal’s advance finds traction in declining crude oil prices and fresh selling pressure on the US Dollar.

Why altcoin season isn't coming back — and what stole its capital

If, after two years of being frozen in ice, Katara and Sokka woke you up to the crypto market, it would seem like 100 years have passed. With Bitcoin soaring to record highs just over a year ago, everyone expected a routine altcoin season, where investors take profits from the top crypto to chase higher returns in altcoins.

BoJ Recap: Not as hawkish as expected

The BoJ raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks. Governor Kazuo Ueda said the policy phase had changed.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.