Gold Price Forecast: XAU/USD Near $4,000 After 3% Drop

Gold Price (XAU/USD) Slides Toward $4,000 as Risk Appetite Returns

Gold extended its decline Monday, with XAU/USD trading near $4,000 and COMEX December futures (GC=F) around $4,002–$4,014, down nearly 3% intraday. The metal has now fallen 7.3% in five sessions, retreating from the recent record high of $4,381/oz, but remains over 50% higher year to date. The pullback coincided with a broad equity rally, as the S&P 500 (+0.98%), Nasdaq (+1.63%), and Dow Jones (+0.51%) all hit fresh highs. Meanwhile, the U.S. Dollar Index (DXY) hovered near 98.69 (-0.06%), and the 10-year Treasury yield eased to 4.02%, limiting downside pressure on bullion.

Trade Truce and Fed Expectations Weigh on Safe-Haven Demand

Gold’s slide followed news of a U.S.–China trade framework that paused plans for 100% tariffs and delayed China’s rare-earth export curbs, cooling global tensions. Softer inflation data (3.0% vs. 3.1% expected) reinforced expectations of a 25 bps Fed rate cut on October 29, with futures implying a 98% probability. Investors rotated back into risk assets, trimming gold exposure. However, lower real yields and a weaker dollar remain structural tailwinds for bullion beyond this correction.

Technical Breakdown: $4,000 Becomes Key Battleground

After peaking at $4,381, gold broke below multiple short-term supports. The first key zone at $4,160–$4,185 turned into resistance, while $4,000 emerged as critical psychological support. A breakdown below that level could open a path toward $3,945, followed by $3,845. To regain bullish momentum, bulls must reclaim $4,150 and $4,185, which would unlock upside targets at $4,318 and $4,380. Volatility remains high, with daily swings averaging around 3%.

Miners Pull Back After Record Run

Gold miners mirrored the drop in bullion. Newmont (NEM) fell 4% to $79.40, following a 6.2% decline Friday. Agnico Eagle (AEM) dropped 5.1%, Barrick Gold (B) lost 2.4%, and royalties Franco-Nevada (FNV) and Wheaton Precious Metals (WPM) both slipped 2.5%. Canada’s S&P/TSX Composite index slid 0.6%. Many miners remain up more than 100% year to date, leaving them vulnerable to profit-taking during gold pullbacks.

Futures Market and Liquidity Flows

Front-month gold futures (GC=F) hovered near $4,002, showing light buying interest around the $4,000 mark. Liquidity thins below $3,945, making the level a potential trigger zone for algorithmic stop-runs. After last week’s **6% daily loss—the steepest since 2013—**systematic traders have reduced exposure. Market makers expect short-term volatility to persist until the Fed’s decision later this week.

Cross-Asset Rotation Shifts Capital Away from Gold

Broader markets stayed risk-on as Brent crude rose 0.2%, WTI gained 0.3%, and the VIX slipped to 16.0 (-2.2%). The TSX lagged due to its mining exposure, while tech-heavy U.S. indices outperformed. Investors viewed easing trade tensions and anticipated Fed cuts as reasons to reallocate from havens to equities.

Long-Term Forecasts Still Bullish

Analyst surveys show gold’s long-term outlook remains positive despite short-term weakness. Consensus for 2025 now averages $3,400/oz, rising to $4,275/oz in 2026. Silver forecasts rose to $38.45 (2025) and $50 (2026), reflecting structural demand from solar and EV sectors. Analysts agree that the current selloff is corrective, not trend-ending, given persistent macro and policy support.

ETF and Central Bank Flows Remain Supportive

Three major drivers underpin the longer-term bull case:
• Central bank buying, led by the PBoC, continues to set demand floors.
• ETF holdings remain near record highs despite light profit-taking.
• Asian retail demand has re-emerged, with strong physical buying during this dip. These structural inflows suggest pullbacks are viewed as opportunities rather than exits.

Catalysts to Watch This Week

• Federal Reserve meeting (Oct. 29): A 25 bps cut is priced in, but tone matters—hawkish comments could test $3,945 support.
• Trade follow-through: Any U.S.–China setbacks could restore the safe-haven bid.
• Dollar and yields: Sustained DXY below 100 and easing real yields would favor gold’s rebound.

Trading Strategy and Risk Zones

Tactically, buyers may accumulate near $4,000–$3,945, placing stops below $3,845. A confirmed close above $4,150 targets $4,318–$4,380. For equities, Newmont (NEM) and Agnico Eagle (AEM) are Holds, while Franco-Nevada (FNV) and Wheaton (WPM) remain Buys on dips given their strong balance sheets and lower volatility profiles.

Outlook and Verdict

Gold remains in a medium-term uptrend within a short-term correction. Macro tailwinds—rate cuts, weaker dollar, and central bank accumulation—continue to favor strength into 2026. Traders should treat current weakness as consolidation before another leg higher.

Verdict: BUY on dips near $3,945–$4,000, targeting $4,185–$4,380 into year-end. Maintain HOLD on major miners and BUY royalties on pullbacks.

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