Gold retreats as US-China trade progress and Fed cut bets weigh on safe-haven demand

Gold (XAUUSD) has pulled back after briefly rising above $4,000. The retreat follows improving sentiment around U.S.–China trade relations, which has reduced safe-haven demand. At the same time, investors remain focused on the Federal Reserve’s next policy move. Markets widely expect two rate cuts by year-end, which will keep pressure on the Dollar. Meanwhile, geopolitical tensions persist, supporting underlying interest in gold. This mix of drivers has left gold consolidating near key levels, with both upside and downside risks in play.

Gold drops on US-China trade optimism and Fed policy expectations

Gold pulled back after failing to hold gains above $4,000. The retreat comes as market sentiment improves on signs of easing tensions between the U.S. and China. This shift has reduced immediate safe-haven demand, placing downward pressure on gold. Still, broader macro drivers and technical patterns suggest the long-term outlook remains bullish.

Meanwhile, investors are now watching for key policy decisions from the Federal Reserve. Markets expect two rate cuts before year-end, with one likely at the upcoming FOMC meeting. These expectations have weighed on the Dollar, offering some short-term support to gold. However, technical selling and tentative buying in equities are limiting further gains.

At the same time, geopolitical risks remain elevated. The Russia-Ukraine conflict has reentered headlines, following reports of new weapons testing. President Trump’s statement regarding U.S. submarine deployment near Russia further fueled geopolitical strain. These conditions may support increased interest in gold and other safe-haven assets. However, progress in U.S.–China trade talks could reduce this impact and weaken safe-haven demand.

Gold breaks out of multi-decade cup-and-handle pattern, confirming long-term bullish setup

The gold chart below shows a powerful structural breakout from a rare multi-decade cup-and-handle formation. Gold began forming the “cup” portion of the pattern after its initial peak, as prices settled into a broad consolidation zone. From 2004 to 2011, the metal rallied sharply, completing the right side of the cup with a peak around $1,920. After the surge, gold entered a multi-year decline that set the foundation for the handle portion of the pattern. The pattern featured rising lows and sustained buying interest, laying the groundwork for a major breakout.

In 2024, gold completed its multi-decade cup-and-handle formation with a decisive breakout above handle resistance. The move cleared a critical red trendline connecting the 1980 and 2011 peaks. This level had acted as a major barrier, capping multiple rallies over the decades. The breakout candle closed firmly above long-term resistance, confirming the pattern and signalling the start of a new secular bull phase. This breakout was driven by a potent mix of falling real yields, dovish Fed expectations, and rising global uncertainty.

Since then, gold has surged beyond the 2025 breakout zone, confirming the start of a long-term secular uptrend. The price now trades firmly beyond the long-term red dashed trendline that capped price action for over four decades. This breakout marks a historic shift in gold’s structural behaviour, with the completed cup-and-handle pattern projecting significantly higher targets in the coming years. As long as gold remains above this former resistance zone, the breakout remains valid and continues to attract long-term capital into the metal.

Gold cycle top validates timing model and confirms precision exit strategy

The chart below shows how cycle-based trading can identify ideal entry and exit points in the gold market. Gold Predictors forecasted a significant high on 21st October (±72 hours), following two clear cycle inversions earlier in the rally. Each inversion marked a strong continuation signal, and the second confirmed bullish momentum into the projected high window.

Gold topped exactly within the expected timeframe, validating the cycle model. At that point, all profits were booked and sent to premium members. This method combines time cycles with price action to identify early entries and timely exits.

Gold outlook: Long-term bullish trend intact despite short-term consolidation

Gold continues to consolidate as shifting macro conditions shape its short-term path. Trade optimism and tentative equity strength have reduced safe-haven flows, pressuring prices after the $4,000 surge. Still, the multi-decade cup-and-handle breakout remains intact, supported by expectations of Fed rate cuts and persistent geopolitical risks. As long as gold holds above key structural levels, the long-term bullish case stays strong, positioning the metal for further upside in the months ahead.

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