Gold Price Forecast: Can XAU/USD sustain gains near $4,100 as risk appetite weighs on the USD?

Gold recovers towards $4,100 on Monday, reversing Friday’s decline
Improved risk appetite weighs on the USD on Monday as Iran peace negotiations continue and Oil holds near two-month lows
Above the descending channel drawn from the late-August highs, XAU/USD maintains its position

A softer US Dollar is supporting precious metals on Monday as Middle East peace efforts continue and Oil holds steady near two-month lows. Gold (XAU/USD) is posting modest gains, recovering Friday’s losses and building on last week’s rebound. Prices stand just below $4.100, while bulls are looking towards last week’s highs around $4,150.

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

Improving risk sentiment has put the US Dollar under broad-based pressure on Monday, with news reports pointing to continuing negotiations for a peace agreement in Iran. Market sentiment also received a boost from US President Trump, who said on Sunday that hostilities against the Islamic Republic were unlikely to resume if the talks made progress.

The latest macroeconomic releases, however, have favoured the USD. A substantial upside surprise in October’s US Nonfarm Payrolls growth has opened the door to further Federal Reserve (Fed) tightening in December. Following Friday’s NFP release, key Fed policymakers also backed this view, which is likely to limit declines in the US Dollar.

Technical Analysis: Can Gold bulls build on the breakout above the bearish channel?

Having rebounded above the descending channel’s upper boundary earlier in the session, XAU/USD is trading at $4,094. Spot gold remains well below its 200-day Simple Moving Average (SMA), keeping the broader outlook constrained. Momentum signals have nevertheless improved: the daily Relative Strength Index (14) has stabilised near 50, while the Moving Average Convergence Divergence (MACD) indicator has moved into positive territory, pointing to strengthening upside momentum.

The $4,150 zone mentioned above, where Friday’s advances stalled, is likely to offer resistance to 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 support lies in the confluence zone comprising the broken trendline at $ 4,050, Friday’s low of $4,030 and the psychological $4,000 mark. A bearish move below this zone would invalidate the bullish outlook, shifting attention to the November 3 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: frequently asked questions

What makes Gold an investment choice?

The widespread use of Gold as a store of value and a medium of exchange has given it an important place in human history. Beyond its lustre and use in jewellery, the precious metal is now widely regarded as a safe-haven asset, or a suitable investment during periods of turmoil. Since it does not depend on any particular issuer or government, Gold is also commonly viewed as a hedge against inflation and currency depreciation.

Which buyers hold the largest Gold reserves?

The largest holders of Gold are central banks. To support their currencies during turbulent periods, they typically diversify their reserves and purchase Gold, strengthening perceptions of both the economy and the currency. Substantial Gold reserves can bolster confidence in a country’s solvency. According to World Gold Council data, central banks increased their reserves by 1,136 tonnes of Gold, valued at around $70 billion, in 2022. That marked the largest annual purchase since records began. Emerging-economy central banks, including those in China, India and Turkey, are rapidly expanding their Gold reserves.

How does Gold move in relation to other assets?

An inverse correlation links Gold with the US Dollar and US Treasuries, both of which are major reserve and safe-haven assets. A falling Dollar generally supports Gold, allowing investors and central banks to diversify their holdings during unsettled periods. Gold also tends to move in the opposite direction to risk assets: stock-market gains usually weigh on its price, whereas selling in riskier markets tends to support the precious metal.

Which factors influence Gold prices?

Several factors can drive Gold prices. Its safe-haven appeal means geopolitical instability or concerns about a deep recession can trigger a rapid rise. Lower interest rates generally benefit Gold because it offers no yield, while a higher cost of borrowing usually puts pressure on the yellow metal. Even so, the US Dollar (USD) drives most price moves, as Gold is quoted in dollars (XAU/USD). Dollar strength tends to restrain Gold prices; a weaker Dollar, by contrast, is likely to lift them.