Gold prices fell below $4,000, dropping to approximately $3,985, marking nearly a 1.0% decrease on the day and positioning for a second consecutive weekly loss. This decline follows reassessment of Federal Reserve’s monetary policy, as Chairman Jerome Powell expressed uncertainty about further rate cuts in December, emphasising data-dependent decisions.

Contributing to Gold’s decline are a stronger US Dollar and stable Treasury yields, reducing expectations for additional rate cuts this year. Positive outcomes from a meeting between US President Donald Trump and Chinese President Xi Jinping have also reduced gold’s appeal as a safe-haven asset.

The Impact Of The Us Dollar

Meanwhile, the US Dollar Index surged to a three-month high, influenced by increased Treasury yields, and reduced expectations for a December rate cut. President Trump and President Xi agreed on a one-year trade truce, influencing these dynamics.

The ongoing US government shutdown, now in its fifth week, contributes to economic uncertainty, potentially affecting future data releases. Upcoming US economic data, including employment and inflation forecasts, could impact market sentiment going forward.

Technical analysis shows Gold facing resistance at $4,020-$4,050, with short-term support near $3,980. A sustained drop below $3,900 may lead to deeper corrections, while the RSI indicates neutral momentum.

Given gold’s recent slip below $4,000, we see the market reacting to a more cautious Federal Reserve. The recent interest rate cut was not followed by promises of more, which has strengthened the US Dollar and pushed Treasury yields up. This environment makes holding a non-yielding asset like gold less attractive in the immediate term.

The Role Of Derivative Traders

This cautious Fed stance is supported by recent data, as the October 2025 Consumer Price Index (CPI) report showed core inflation holding at 3.4%, slightly above expectations. This stickiness in inflation explains why the odds of another rate cut in December have dropped to around 67%, according to the CME FedWatch tool. For traders, this means the path of least resistance for gold is likely sideways or slightly down in the coming weeks.

While the one-year trade truce between the US and China has dampened the need for safe-haven assets, the ongoing US government shutdown introduces a conflicting variable. We’ve seen the shutdown delay the official October jobs report, creating uncertainty about the economy’s true health. This underlying risk could provide a floor for gold prices if the political stalemate continues.

For derivative traders, the current outlook suggests range-bound strategies may be most effective. With strong resistance near $4,050 and solid support around $3,900, selling covered calls against physical holdings or establishing iron condors could capitalize on this expected consolidation. These strategies would profit from gold staying within this defined channel and from time decay.

Looking back, we remember the major bull run from the sub-$2,000 levels of 2023, making the current pause appear as a healthy market consolidation. Options data reflects this, with implied volatility for gold futures falling to a six-month low last week, signaling that traders are not positioning for a dramatic price swing. This reinforces the idea that we are in a temporary holding pattern before the next significant move.

Despite the near-term weakness, long-term fundamental support remains strong. The latest World Gold Council report for Q3 2025 showed that central banks continued their aggressive buying, adding over 250 tonnes to their reserves. This persistent demand, especially from emerging economies, suggests that any significant dip below $3,900 could be viewed as a buying opportunity for those with a longer time horizon.

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