Gold News: Central Bank Demand Strong, But Can It Drive a Breakout Above $4000?

Gold Price Stalls Below $4000 as Traders Eye Bearish Reversal Setup

Spot gold (XAU/USD) is trading flat in early U.S. hours after hitting a fresh all-time high at $3977.40. The rally, fueled by strong central bank and ETF demand, now faces psychological resistance at the $4000 level. Price action is beginning to show signs of fatigue, and traders are watching closely for a potential bearish closing price reversal top — the setup is already halfway there with today’s higher high.

A sustained move below the minor bottom at $3819.42 would signal a shift in short-term momentum and potentially trigger a deeper pullback.

At 11:05 GMT, XAU/USD is trading $3960.71, up $0.02 or 0.00%.

Record High Backed by ETF Inflows and Central Bank Demand

The gold market’s vertical move has been underpinned by surging demand from both institutional and retail investors. Saxo Bank’s Ole Hansen pointed to a mix of FOMO, eroding trust in traditional safe havens, and persistent central bank buying as key drivers. China’s central bank just added gold to its reserves for the 11th straight month, signaling continued accumulation at the sovereign level.

Gold has climbed 51% year-to-date, with ETF inflows accelerating in recent weeks. Goldman Sachs raised its long-term target, forecasting $4900 by December 2026, citing a weakening U.S. dollar and persistent geopolitical risk.

Fed Rate Cut Bets Still in Play Despite Data Blackout

Markets are currently pricing in two more 25 basis-point Fed rate cuts this year — one at the next meeting and another in December. However, the ongoing U.S. government shutdown has delayed key data releases, including the September jobs report, forcing traders to rely on secondary indicators and Fed-speak for policy clues.

Ian Lyngen at BMO notes the data blackout puts the Fed in a bind: “It sets a high bar to pause cuts, but also limits justification for any acceleration.” Fed Chair Powell and Governor Miran are due to speak this week, which could provide near-term catalysts for rate expectations — and by extension, gold.

Treasury Yields and Dollar Respect Key Technical Levels

Treasury yields remain rangebound, with the 10-year sitting just below its 50-day moving average at 4.19%. A break above that could sap some demand for non-yielding gold.

Meanwhile, the U.S. Dollar Index is attempting to firm, hovering just over its own 50-day at 98.026.

So far, neither yields nor the dollar have made a decisive move, keeping gold supported for now.

Gold Price Forecast: Cautious Bullish, but Watch for a Reversal

The gold market is still fundamentally supported by strong physical and investment demand, softening real rates, and geopolitical stress. But the technical setup is flashing a warning here.

A close below yesterday’s close would complete a bearish reversal and shift bias toward the downside, with $3819.42 the first critical test.

Unless gold can settle above $3884.11 — and push convincingly through $4000 — traders should be cautious of upside exhaustion.

More Information in our Economic Calendar.