Gold Price Forecast: Can XAU/USD extend its rebound from the $4,000 area while bears remain in control?

Can XAU/USD stabilise at $4,030 after shedding earlier gains and touching fresh three-month lows of $3,986?
Precious metals find some support as US Treasury yields fall sharply and expectations of Fed tightening fade.
Gold's rebound faces a constraint from Oil prices trading at multi-month highs.

Recovery attempts in Gold (XAU/USD) remain constrained on Friday, although a steep fall in US Treasury yields is lending precious metals some support. Following a rebound from 3-month lows around $4,000, Gold is trading just below $4,030, leaving it virtually unchanged on the daily chart. A surge in Oil prices to fresh highs has forced global central banks towards more restrictive monetary policies, limiting the upside.

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

Growing worries over an AI bubble prompted a flight to safety into US Government yields on Thursday. The benchmark US 10-year note yield fell 15 basis points, marking its steepest one-day drop since 2023.

Long-term Treasury yields are consequently on course for a three-week fall. This relieves pressure on the Federal Reserve (Fed), giving the central bank greater room to evaluate the economic effects of September's rate hike while making non-yielding precious metals more attractive.

A substantial recovery in Gold, however, is likely to face considerable resistance from Oil prices. After Brent Oil climbed above $110 to fresh five-month highs, the US benchmark WTI barrel also traded above $100 earlier in the day.

Technical Analysis: Can bulls overcome resistance around $4,070?

Within the bearish channel originating at the early September high, XAU/USD is trading at $4,024.42. On the 4-hour chart, however, the Relative Strength Index (RSI) is deep in oversold territory. This suggests that selling pressure might be exhausted and that a bullish correction should be considered.

Any advance is likely to encounter resistance first at $4,070, a former support zone, followed by the highs recorded on Tuesday and Wednesday near $4,150. Beyond that lies the $4,200 to $4,220 band, which has repeatedly halted rallies during October.

Should prices slip below the $4,000 region, strong support is likely at the year-to-date lows between $3,960 and $3,941. The lower boundary of the channel now sits further down, around $3,925.

(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?

Widely used both to preserve wealth and to facilitate exchange, Gold has occupied an important place throughout human history. Beyond its lustre and role in jewellery, the precious metal is now commonly regarded as a safe-haven asset, or an investment considered attractive during periods of uncertainty. Its independence from any particular issuer or government also underpins its widespread use as a hedge against inflation and currency depreciation.

Which buyers account for the largest Gold holdings?

The largest holders of Gold are central banks. To shore up their currencies during unsettled periods, they typically diversify reserves and purchase Gold, strengthening perceptions of the economy and its 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 about $70 billion in 2022, the largest annual purchase on record. Emerging-market 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, key reserve and safe-haven assets, have an inverse relationship with Gold. A weakening Dollar generally supports Gold, helping investors and central banks diversify their holdings during uncertain periods. The metal also tends to move in the opposite direction to risk assets: stock-market gains usually put pressure on Gold prices, whereas selling in riskier markets generally supports the precious metal.

Which factors influence Gold prices?

Several forces can drive Gold prices. Its safe-haven appeal means that geopolitical turmoil or concerns about a severe recession can trigger rapid gains. Since Gold offers no yield, lower interest rates generally support it, while a higher cost of money typically weighs on the metal. Even so, the behaviour of the US Dollar (USD) drives most price movements, as Gold is denominated in dollars (XAU/USD). Dollar strength tends to restrain Gold prices; a weaker Dollar, by contrast, is likely to lift them.