Gold prices made a strong comeback this week, reclaiming the $4,000 mark after a four-day decline. Renewed safe-haven demand, a softer US dollar, and fresh optimism following US–China trade discussions have all contributed to the metal’s sharp rebound.
Spot gold (XAU/USD) rose 1.3% in early European trade to around $3,982 per ounce, recovering nearly 5% of value lost in recent sessions. The rally comes amid sustained central-bank buying and ongoing economic uncertainty linked to the prolonged US government shutdown.
Adding fuel to the recovery, President Donald Trump described his recent meeting with Chinese leader Xi Jinping as “amazing,” announcing a limited trade deal that includes halved fentanyl tariffs, renewed soybean imports, and a one-year pause on rare-earth licensing. Markets interpreted this as a tentative step towards easing trade tensions, sparking mild risk appetite while preserving gold’s appeal as a hedge against uncertainty.
Fed Cuts Rates but Maintains Caution
The US Federal Reserve delivered a second 25-basis-point rate cut of 2025, while signalling a cautious stance on further monetary easing. Fed Chair Jerome Powell acknowledged softening labour-market conditions but warned against excessive cuts without stronger economic data, keeping the US dollar from falling too steeply.
The softer dollar, combined with Powell’s balanced tone, supported renewed gold buying — though investors remain watchful of how policy data evolve in coming weeks.
Technical Outlook: Key Levels to Watch
Technically, gold faces short-term resistance at $4,016 and $4,060, with immediate support seen around $3,950 and $3,886. Analysts note the $4,000 level as a crucial pivot, representing the 23.6% Fibonacci retracement line — a key indicator for short-term momentum.
A decisive break above $4,016 could open the door to $4,100, while a drop below $3,900 may signal further correction toward $3,850.
Market Sentiment and Forecast
Year-to-date, gold has gained nearly 50%, with silver up 60%, driven by persistent inflation concerns, central-bank diversification, and investor demand for tangible assets. Silver was last seen trading around $47.77 per ounce, rebounding from one-month lows.
At the 2025 LBMA Global Precious Metals Conference, market delegates projected gold prices could rise by 25% over the next year to around $4,980 per ounce — potentially challenging the $5,000 milestone. Analysts cite strong institutional demand and sustained macroeconomic uncertainty as the primary catalysts for continued strength.
As the US dollar softens, trade optimism grows, and inflation risks linger, all eyes are on whether gold can hold decisively above the $4,000 psychological barrier — the key line between short-term correction and another historic rally.
