XAU/USD outlook: Gold price dips below critical $4,000 support zone

XAU/USD

Gold fell around 3% on Monday and broke below critical $4000 support, deflated by fresh risk appetite on growing optimism over coming US-China trade talks.

Easing trade tensions between world’s two largest economies provides temporary relief, prompting traders into riskier assets.

In my previous reports I marked $4000 as a breakpoint and pointed to existing risk of break lower and deeper correction, despite the strength of broader uptrend and strong bullish sentiment, continuously boosted by several key factors.

The situation got fragile after the first attack at $4K zone on Oct 22, as subsequent bounce lacked strength to regain upper breakpoints and was repeatedly capped.

The latest news was just a catalyst that pushed the price sharply lower on Monday, although driven by speculations, after teams outlined the framework ahead of meeting of US and Chinese Presidents on Thursday.

Fresh bears also cracked important Fibo support at $3972 (38.2% of $3311/$4381) with sustained break of these supports to validate strong bearish signal and open way for potential deeper drop towards $3900 (round figure) and $3846 (50% retracement) in extension.

The latest price drop weakens near-term structure as south-heading 14-d momentum cracks the centreline dividing positive and negative territory and RSI moved below 50, though stochastic is about to enter oversold zone.

Market focus turns to Fed policy decision (due to be announced on Wednesday) and particularly looking for signals from Fed Chair Powell about the central bank’s action in coming months (end of 2025 and beginning of 2026) as two rate cuts (Oct / Dec) have been already priced in and looking whether the Fed will keep dovish stance or not.

I don’t see prospects for spectacular drop after $4000 was violated, as current story about trade talks is likely to have temporary and limited impact on broader bullish structure, as geopolitical situation remains very sensitive and with growing threats of further escalation, macroeconomic situation hasn’t improved and demand for physical gold remains strong.

All these contribute to scenario of deeper correction which is expected to provide better levels to re-enter larger uptrend.

Res: 4064; 4100; 4128; 4173.

Sup: 3952; 3900; 3846; 3800.

Interested in XAU/USD technicals? Check out the key levels