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Gold prices faced renewed pressure today, extending last week’s decline as improving risk sentiment lifted global markets. After an impressive nine-week winning streak, the metal’s momentum has sharply reversed, with prices falling 3.5% over the week — though at one point, the drop was even steeper. Despite this, gold had managed to find support around the $4,000 level. However, that crucial threshold has now been breached, marking an important turning point for the near-term outlook. The question now is whether gold will remain below this key level or stage a swift recovery above it.

Why are gold prices down today?

In part because of the continued selling from last week, after the metal ended a 9-week wining run last week. But more to the point, we saw a risk rally that saw S&P 500 futures hit new highs, reducing the appeal of haven assets, after Chinese and US trade negotiators have apparently had some progress in making a trade deal ahead of the Trump-Xi meeting later in the week when we also have several central bank meetings and earnings from tech giants. Trump told reporters that “I really feel good” about a deal with China. It is possible that the deal will include China resuming soy purchases while also removing critical rare-earth magnets restrictions, and the US, for its part, walking back its latest 100% tariff threat. But experts have warned that this won’t be enough to address the major issues surrounding national security, state subsidies and tech competition. Let’s see how things will evolve, but for now markets have taken the signs optimistically. 

China’s apparent slowdown in gold buying

Adding to the downbeat sentiment on the gold prices today, there was an apparent slowdown in the PBoC gold buying at the end of Q3, judging by Hong Kong's September net gold exports to China falling 17.6% month-on-month.While this was evidently a slowdown in buying, China still imported a good 22.047 metric tons of the shiny stuff from HK. The continued buying suggests China is continuing to add to its reserve, although high prices is probably what caused them to slow down their purchases. Traders might see this a sign of slowing demand but let’s not make any haste judgements by one month’s worth of data. The PBOC’s own net purchases data will come out in early November so we will have a better idea then. 

Looking ahead: US-China trade talks and central bank meetings

As well as the US-China trade talks, we have lots of central bank meetings to look forward to this week. Last week, expectations of further monetary easing rose for example from the Bank of England after weaker CPI data from the UK. A lot will also depend on the direction of the US dollar, which has also played its part in gold’s pullback, putting the Fed meeting into focus in mid-week. Recently, the rebounding dollar has been making gold more expensive for international buyers, but if the greenback resumes lower again then this negative influence will no longer be there.In terms of haven demand, while easing trade tensions between the US and China ahead of Trump-Xi meeting has fuelled a recovery in risk appetite, hopes of a ceasefire and end to the Russia-Ukraine war have been dashed.So, it is far too early to suggest that the longer-term bull trend has ended for gold, especially when you consider that many investors who missed out on the big rally may soon consider stepping in to buy the dip, which they may well have done already with gold bouncing from a key technical area.

The week ahead is full of central bank meetings with the US-China trade talks likely to overshadow any rate decisions in terms of market impact. Still, should central banks turn more dovish, then that should be good news gold. The opposite if they appear more hawkish than expected.

Has the trend changed for gold?

From a technical standpoint, gold was always in danger of breaking the $4K support level after how it closed last week. Lo and behold, it sliced through this hurdle earlier today before divingfurther $15 at the time of writing. But whether the move below $4,000 proves to be a temporary one or otherwise is what we should be focusing on now from a tactical standpoint. 

The broader gold forecast remains cautiously bullish as long as prices hold around the $4,000 threshold, give or take a couple of hundred dollars. The bears will be looking for a decisive breakdown – one that sees gold remains below this hurdle for a while longer than just a couple of days. If this scenario plays out, then it could trigger further liquidation, particularly from speculative long positions. Conversely, resilience here around the $4K level may tempt dip-buyers back into the market — especially those who missed out on earlier gains.

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In terms of resistance, well sits around $4045, marking Friday’s low now that we have broken below it. Above that, $4,200 is the next key battleground -- a sustained move above that zone could signal that the longer-term uptrend remains intact. But for now, the focus is all on that $4,000 level: is this going to be reclaimed quickly or not? If not, it would likely open the door to deeper corrections.

In summary, the near-term gold forecast hinges on risk sentiment, central bank buying, and the dollar’s trajectory. While optimism over trade talks has dulled gold’s appeal for now, the longer-term outlook remains underpinned by lingering geopolitical and inflationary risks, ensuring the metal is far from out of favour. But in the short-term, the break below $4K, if sustained, won’t be a great sign.

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