Gold buyers reclaim control as economic jitters mount; what's next

After a few weeks of sideways movements and directionless trading, gold bulls have regained control as prices rose more than 1% on Monday. 

“After weeks of tight sideways movement, Gold (XAU/USD) has finally broken out of its $3,901.50–$4,059.55 consolidation range, reclaiming its bullish footing and reawakening buyers who’ve been waiting for directional confirmation,” Jasper Osita, market analyst at ACY Securities, said in a report. 

Global slowdown concerns, fueled by disappointing economic data, drove gold prices up over 1% on Monday, with further support coming from anticipation of another Federal Reserve interest rate reduction in December.

At the time of writing, the COMEX gold contract was at $4,064.40 per ounce, up 1.4% from the previous close. 

Weak economic data

Last week's data indicated that the US economy lost jobs in October, driven by declines in the government and retail sectors. 

Concurrently, a wave of announced layoffs surged as businesses implemented cost-cutting measures and increased their adoption of artificial intelligence.

Meanwhile, consumer sentiment in the US dropped to its lowest point in almost three-and-a-half years in early November, a Friday survey revealed. 

The decline was attributed to concerns over the economic impact of the longest government shutdown in history.

The preliminary Consumer Sentiment Index, released by the University of Michigan (UoM) on Friday, fell to 50.3, marking its lowest level in nearly three-and-a-half years.

Fed rate cut hopes boost prices

In this environment, market pricing suggests a roughly 67% probability of the US Federal Reserve (Fed) implementing an interest rate cut in December, according to the CME FedWatch Tool.

“Gold is therefore likely to remain in demand as a safe haven, even though the US dollar has recently gained some ground again,” Barbara Lambrecht, commodity analyst at Commerzbank AG, said. 

Gold, which is non-yielding, typically performs well when interest rates are low and during periods of economic uncertainty.

Additionally, a potential breakthrough in the 40-day federal government shutdown emerged on Sunday, as the US Senate seemed ready to advance a measure. 

This measure aims to restart the government and resolve the shutdown, which has caused federal workers to be sidelined, delayed crucial food aid, and disrupted air travel.

“Looking ahead, Gold’s price action will likely be determined by the US shutdown news and the probable publication timeline of the missed economic data releases,” Dhwani Mehta, senior analyst at FXstreet, said in a report. 

Technical outlook

Rising metal holdings by China are a key factor supporting gold prices. 

In the first nine months of 2025, China saw a 164% increase in its Gold Exchange-Traded Funds (ETF). 

Furthermore, the People's Bank of China (PBOC) has consistently increased its gold purchases for the 11th consecutive month, bringing its total reserves to 2,303.5 tons.

If gold can hold above the $4,000 level, it would confirm the breakout as a structural shift back to bullish control, according to ACY Securities’ Osita. 

Traders will be looking for a higher low to form in the $4,000–$4,020 range, continuation toward $4,120–$4,200, and a strong buying reaction from the former range resistance ($4,059.55) to turn into support, he added.

“The $4,000 zone represents not only institutional positioning but also a symbolic battle line for bulls defending their long-term trend,” Osita said. 

From a downside perspective, the immediate support level is identified at $3,973, Mehta said.

Should sellers push the price below this, their next target would be the intermittent lows around $3,930. A breach of this level would subsequently open the way to the $3,900 mark, according to Mehta.