$4,100 area: Gold price forecast as XAU/USD maintains gains while risk appetite weighs on USD

$4,100 in sight as Gold recovers Friday's losses on Monday
USD weakens on Monday as risk appetite improves, Iran peace talks continue and Oil holds near two-month lows
XAU/USD stays above the descending channel's upper boundary drawn from late August highs

Gold (XAU/USD) trades just below $4.100. Monday’s modest advance reverses Friday’s losses and builds on last week’s recovery, with bulls targeting last week’s highs around $4,150. A softer US Dollar is supporting precious metals as efforts to secure a Middle East peace agreement continue and Oil prices hold near two-month lows.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Reports of continuing negotiations over a peace agreement in Iran have lifted risk sentiment, sending the US Dollar lower across the board on Monday. US President Trump helped reinforce the improved mood on Sunday, stating that renewed hostilities against the Islamic Republic were unlikely if negotiations made progress.

The latest macroeconomic releases, however, have favoured the USD. October’s US Nonfarm Payrolls growth exceeded forecasts by a substantial margin, opening the way for additional Federal Reserve (Fed) tightening in December. Following Friday’s NFP release, key Fed policymakers also backed that outlook. These factors are likely to limit US Dollar declines.

Technical Analysis: Gold breaks above bearish channel

$4,094 is the current trading level for XAU/USD. Earlier in the session, the pair rebounded above the descending channel’s upper boundary. Spot gold remains well below its 200-day Simple Moving Average (SMA), keeping the broader outlook constrained. Momentum signals are improving, however: the daily Relative Strength Index (14) has stabilised near 50, while the Moving Average Convergence Divergence (MACD) indicator has moved into positive territory.

The $4,150 zone, where Friday’s rallies stalled, is likely to present resistance for buyers. A break above it would put the early October highs around $4,230 in view, followed by the mid-September highs near $4,400.

Initial downside support lies in a cluster comprising the breached trendline at $4,050, Friday’s low at $4,030 and the psychological $4,000 mark. A bearish move below this zone would invalidate the bullish outlook. Attention would then shift to the 3 November low near $3,900 and the channel’s lower boundary, currently at $3,825.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Gold: Key questions answered

What attracts investors to Gold?

As a widely used store of value and means of exchange, Gold has held an important place throughout human history. Beyond its lustre and use in jewellery, the metal is now widely regarded as a safe-haven asset, making it a favoured investment during periods of turmoil. Its independence from any particular issuer or government also underpins its widespread appeal as a hedge against inflation and currency depreciation.

Which buyers hold the most Gold?

The largest Gold holdings belong to central banks. To support their currencies during turbulent periods, they typically diversify reserves and purchase Gold, strengthening perceptions of their economies and currencies. Substantial Gold reserves can bolster confidence in a country’s solvency. World Gold Council data show that central banks increased their reserves by 1,136 tonnes in 2022, worth around $70 billion. That annual purchase total was the largest on record. Emerging-economy central banks, including those in China, India and Turkey, are rapidly expanding their Gold reserves.

How does Gold move relative to other assets?

Both the US Dollar and US Treasuries are major reserve and safe-haven assets, and Gold is inversely correlated with them. Dollar weakness typically lifts Gold, allowing investors and central banks to diversify their holdings during unsettled periods. The metal also has an inverse relationship with risk assets: stock-market gains tend to put pressure on Gold prices, whereas selling in riskier markets generally supports the precious metal.

Which factors drive Gold prices?

Many factors influence Gold prices. Its safe-haven appeal can drive rapid gains when geopolitical tensions rise or fears of a severe recession emerge. Because Gold pays no yield, lower interest rates generally support it, while higher borrowing costs usually exert pressure. Most price movements nevertheless hinge on the US Dollar (USD), since Gold is quoted in dollars (XAU/USD). Dollar strength tends to restrain Gold prices; a weaker Dollar is likely to lift them.