Gold steadies above $4,100 as safe-haven demand offsets risk-on mood, USD uptick

Gold (XAU/USD) reverses an intraday slide to levels below the $4,100 mark and trades with positive bias during the first half of the European session, though it remains below the all-time peak touched earlier this Tuesday amid mixed fundamental cues. US President Donald Trump's pivot on China tariffs remains supportive of the upbeat market mood. Moreover, the US Dollar (USD) attracts some dip-buyers and turns positive for the second straight day, which, in turn, could act as a headwind for the commodity.

Any meaningful USD appreciation, however, seems elusive in the wake of the growing acceptance that the US Federal Reserve (Fed) will lower borrowing costs two more times in 2025, which might continue to benefit the non-yielding Gold. Apart from this, concerns that a prolonged US government shutdown could affect the economic performance turned out to be another factor supporting the safe-haven precious metal amid renewed US-China trade tensions and geopolitical risk stemming from the Russia-Ukraine war.

Daily Digest Market Movers: Gold bulls have the upper hand amid supportive fundamental backdrop

• With no resolution in sight, the stalemate over how to reopen the US government will extend into a third week as Democrats and Republicans continue to trade blame for the shutdown that began on October 1. The Senate returns on Tuesday and is expected to vote again on the funding plan, which has fallen short of the necessary 60-vote threshold seven times.
• US President Donald Trump reignited trade tensions on Friday and threatened to impose a sweeping 100% tariff on all Chinese goods from November 1 in retaliation for China’s enhanced restrictions on the export of rare earths. This marks another escalation in the trade war between the world’s two largest economies and continues to benefit the safe-haven Gold.
• Trump softened his stance on Sunday and posted on Truth Social that the US does not wish to hurt China. Trump added that both countries wish to avoid economic pain, easing concerns about a trade war between the world's two largest economies and boosting investors' confidence. This, however, fails to hinder the commodity's strong follow-through positive move.
• On the geopolitical front, Ukrainian long-range drones hit at least five reservoirs in the Russian-occupied Crimean peninsula. Meanwhile, Russian forces attacked Kharkiv, Ukraine’s second-largest city, with guided bombs on Monday. The intensifying Russia-Ukraine war turns out to be another factor that contributes to the precious metal's record-setting run.
• Traders have now fully priced in the probability that the US Federal Reserve will lower borrowing costs by 25 basis points in October and see a 90% chance for another rate reduction in December. The dovish outlook provides an additional boost to the non-yielding yellow metal and backs the case for an extension of the recent well-established uptrend.
• The US Dollar is looking to build on the previous day's positive move and remains close to its highest level since early August, touched last week, though it does little to dent the underlying bullish sentiment surrounding the XAU/USD. This, in turn, suggests that the path of least resistance for the commodity remains to the upside.

Gold bullish potential seems intact while above a multi-week-old ascending trend-line support

From a technical perspective, the recent move up witnessed over the past three weeks or so has been along an upward-sloping trend-line support. Moreover, the overnight breakout through the $4,055-4,060 horizontal resistance and a subsequent strength beyond the $4,100 mark reaffirm the near-term positive outlook for the XAU/USD pair. However, the daily Relative Strength Index (RSI) is flashing extremely overbought conditions and warrants caution before positioning for a further appreciating move.

Meanwhile, any meaningful corrective pullback might now be seen as a buying opportunity and is more likely to remain cushioned near the $4,060-4,055 region. A convincing break below the latter, however, might prompt some technical selling and drag the Gold price to the $4,000 psychological mark en route to the ascending trend-line support, currently pegged near the $3,985 zone. Some follow-through selling could be seen as the first sign of a possible bullish exhaustion and pave the way for deeper losses.

(This story was corrected on October 14 at 09:22 GMT to say that Gold steadies above $4,100, not $4,1,00.)