Gold prices saw a sharp decline in early trade today breaching the $3900/oz handle and touching a three-week low. The selloff this week is down to a host of factors but the main one being increasing hopes of a US-China trade deal which has led to a risk-on environment.
There is also potential profit taking, a slightly stronger US Dollar and the upcoming Federal Reserve meeting which could all be contributing towards Gold’s recent pullback.
The precious metal has risen around 1.5% since the European session lows to trade around the $3960/oz handle at the time of writing. The question now is, can bulls breach the $4000/oz handle once more?
Looking Ahead – Trump-Xi Meeting, FOMC Meeting
Two big events are coming up that will affect the markets, the US Dollar and Gold prices.
First, financial markets are preparing for the Federal Reserve’s (Fed) announcement on Wednesday, where they are widely expected to cut the benchmark interest rate by 0.25%. The main focus for investors will be on what the Fed says about future rate cuts, as traders have already assumed there will be one more cut in December and one more in 2026.
Second, everyone is watching the expected meeting between US President Donald Trump and Chinese President Xi Jinping later this week, hoping the leaders will find a way to stop the trade tensions from getting worse and iron out a trade deal between the world’s two largest economies.
For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)
Technical Analysis – Gold (XAU/USD)
From a technical standpoint, Gold did follow through after last weeks double top pattern, with the precious metal declining a lot further with very little pullback.
The precious metal has broken below the 50 and 100-day MAs. This is the first time Gold trades below both of them since August 22, 2025 on the four-hour timeframe.
Gold has bounced aggressively off key support around the 3900 mark.
Immediate resistance rests at the 3975 handle before the 4000 handle comes back into focus.
Personally i would prefer a candle close above the 4013 handle which would be an indication that structure has changed. This would provide me with piece of mind regarding bullish interest in the precious metal remaining strong.
A break below the 3900 handle though opens up a retest of the 3875 handle before the 3850 and 3800 handles come into focus.
Gold (XAU/USD) Four-Hour Chart, October 28, 2025
Source: TradingView (click to enlarge)
Client Sentiment Data – XAU/USD
Looking at OANDA client sentiment data and market participants are Long on Gold with 75% of traders net-long. I prefer to take a contrarian view toward crowd sentiment and thus the fact that the majority of traders are net-long suggests that Gold prices could continue to slide in the near-term.
