HG MARKETS:

During the early European trading session, gold (XAU/USD) witnessed renewed interest from dip-buyers, effectively pausing its recent corrective decline from the record high reached on Friday. The enduring presence of trade-related uncertainties, escalating geopolitical tensions, and apprehensions regarding the potential adverse economic ramifications of a protracted U.S. government shutdown continue to bolster the appeal of the safe-haven precious metal. Additionally, prevailing dovish expectations surrounding the Federal Reserve’s monetary policy stance further sustain investor demand for the non-yielding asset.

Market participants have fully priced in two additional Federal Reserve rate cuts this year, undermining the US Dollar’s recovery and, alongside global fiscal concerns, central bank accumulation, and robust ETF inflows, continuing to support gold; however, President Trump’s recent remarks easing fears of a full-scale US-China trade war may limit further upside for the metal.

On Friday, U.S. President Donald Trump stated that a full-scale tariff on China would be unsustainable and confirmed an upcoming meeting with his Chinese counterpart, triggering some profit-taking in gold, although the pullback lacked momentum. Despite this, investor sentiment remains cautious amid persistent geopolitical tensions, the ongoing U.S. government shutdown, and growing concerns over fiscal discipline and mounting national debt, particularly in the United States. Additionally, heightened geopolitical risk was underscored by Ukrainian drone strikes targeting a Gazprom gas facility and a Novokuibyshevsk oil refinery in southern Russia, raising fears of further escalation in the Russia-Ukraine conflict. Collectively, these factors continue to lend support to the safe-haven appeal of gold.

The prolonged U.S. government shutdown, now in its 20th day amid partisan gridlock over healthcare subsidies, continues to cloud market sentiment. Concurrently, dovish Fed expectations—reflected in fully priced-in rate cuts for October and December—are curbing the U.S. Dollar’s rebound and enhancing gold’s allure. With Fed officials in a pre-meeting blackout and critical inflation data on the horizon, traders are treading cautiously, leaving the greenback susceptible to geopolitical and trade-driven volatility.

From a technical perspective, XAU/USD demonstrated resilience near the $4,210–$4,200 support zone, marked by the 100-hour Simple Moving Average and the 38.2% Fibonacci retracement of the October 9–17 rally. However, bullish momentum now faces a key hurdle around $4,275 (23.6% Fibo. level), which serves as a pivotal intraday threshold; a sustained break above this could propel prices toward $4,300, $4,325, and potentially a retest of the all-time high near $4,379–$4,380. On the downside, immediate support rests around $4,219–$4,218, with further weakness targeting $4,200 and $4,186, while a decisive break below $4,163–$4,162 (50% Fibo.) could expose gold to an extended decline toward the $4,100 region—aligned with the 61.8% retracement—which, if breached, may confirm a near-term top and trigger a deeper corrective move.