Gold (XAU/USD) holds modest intraday gains during early European trading on Monday but remains capped below the $4,050 level amid mixed market cues. The precious metal draws some safe-haven support after US President Donald Trump hinted at fresh restrictions on the export of advanced AI hardware to China, rekindling US-China tensions. Additionally, worries about potential economic fallout from the prolonged US government shutdown continue to underpin demand for the metal.
However, the US Dollar (USD) remains firmly supported by the Federal Reserve’s hawkish stance, which keeps upward pressure on yields and limits further gains in gold. The non-yielding metal also faces headwinds from the generally positive tone in equity markets, which reduces demand for safe-haven assets.
Market Drivers: Safe-Haven Flows vs. Fed Tightness
On Sunday, President Trump told reporters aboard Air Force One that Nvidia’s advanced Blackwell AI chip “would not be available to other people,” signaling potential restrictions on tech exports to China. The comment dampened some of the recent optimism surrounding the US-China trade détente, helping gold find modest buying interest.
Meanwhile, the US government shutdown has reached Day 33, with no resolution in sight. Trump urged Republican senators to end the impasse by abolishing the filibuster rule, a move party leaders have so far resisted. Fears of a prolonged closure dragging on economic growth have also lent mild support to the precious metal.
Last week, the Federal Reserve cut interest rates by 25 basis points for the second time this year but signaled that further easing is unlikely in the near term. Chair Jerome Powell stressed that another rate cut at the December meeting was “far from a foregone conclusion.” Subsequent remarks from several FOMC members echoed this sentiment, pushing back against market expectations for additional stimulus.
As a result, the US Dollar Index (DXY) remains near its highest level since early August, reflecting investor preference for the Greenback and putting a lid on gold’s recovery attempts.
Upcoming Catalysts: ISM PMI and Fed Commentary
Traders are now eyeing the release of the US ISM Manufacturing PMI later in the North American session, alongside remarks from several Federal Reserve officials. These could provide further direction for the USD and, by extension, gold prices.
Technical Outlook: Key Resistance Around $4,050
Gold found support near the 100-hour Simple Moving Average (SMA) during Asian trading, with short-term indicators turning modestly positive. However, analysts note that the metal must clear the $4,045–$4,050 resistance zone to confirm a sustained recovery.
- Upside targets: A decisive move above $4,050 could expose the $4,075 level, followed by $4,100.
- Downside supports: Immediate support lies near $3,963–$3,962, followed by $3,917–$3,916 and the $3,900 psychological mark. A break below $3,886 — last Tuesday’s three-week low — would open the door toward $3,850–$3,845, and potentially $3,800–$3,760.
Given these factors, gold may continue to struggle for bullish momentum unless the US data or Fed commentary softens the USD’s appeal.
