The US dollar's rally suppresses gold prices, with multiple technical levels becoming the focus

Gold prices have been under pressure for the third consecutive trading day on Monday, as the tug-of-war in fundamentals makes it difficult for bulls to find a breakout opportunity. Gold (XAU/USD) briefly rose above $4100 in the early session but was quickly met with selling pressure, lacking substantial upward momentum. The main reason is the shift in the Federal Reserve’s internal stance on further rate cuts—an increasing number of FOMC members are signaling caution, which directly dampens market expectations for additional rate cuts in December, thereby giving the US dollar strong upward momentum.

The appreciation of the US dollar is the main reason for the pressure on safe-haven assets

When the dollar strengthens, gold priced in USD naturally loses appeal. Data shows that the probability of a 25 basis point rate cut by the Federal Reserve in December has fallen below 50%, which has put additional pressure on gold, a non-yielding asset, for the second consecutive day. Kansas City Fed President Jeffrey Schmid’s comments last Friday further reinforced this expectation—he explicitly stated that inflation remains above target, and monetary policy should remain moderately tight, implying limited room for rate cuts. This shift in policy signals allowed the dollar to gain some breathing room at the start of the new week, becoming the main factor suppressing gold prices.

Economic concerns provide a bottom support for safe-haven assets

However, the downside potential for gold has not fully opened. The longest government shutdown in US history continues to threaten economic momentum, and this macro uncertainty preserves gold’s safe-haven value. Weaker risk sentiment also suggests that the market has not fully turned optimistic; traders are more inclined to wait and see rather than act—important turning points such as the upcoming FOMC meeting minutes on Wednesday and the October Non-Farm Payrolls (NFP) report on Thursday could influence the trend. This cautious stance has helped gold hold near Friday’s lows (around $4032), well above the weekly low.

Technical outlook: clear support and resistance levels

On the 4-hour chart, gold shows resilience below the 20-period simple moving average, but the lack of subsequent buying support means bulls need to remain cautious. Currently, the negative momentum indicator suggests that whether prices can hold above $4100 remains critical—only a break and confirmation above this level could open the way toward the resistance zone at $4140-$4145, challenging the key $4200 level.

On the downside, if the 4-hour chart breaks below the 200-period simple moving average (around $4059), gold may seek support near Friday’s low at $4032. A breakdown below this level could test the psychological $4000 mark, and deeper medium-term support is seen at $3931, with a potential retest of the late October low around $3886.

Trader sentiment: Market mood appears somewhat uncertain. Investors generally expect US economic data to show signs of weakness, forcing the Fed to further ease policy stance. This expectation conflicts with current policy signals. In this tug-of-war, gold’s price movement will depend more on the actual data releases than on existing policy guidance.