Gold News: Overbought RSI Short Sellers Feed the Bull as Gold Clears $4200 With Power

Gold Price Clears $4200 for First Time as Fed Cut Bets, US-China Tensions Accelerate Bid

Spot gold (XAU/USD) surged to an all-time high of $4218.41 on Wednesday, driven by deepening U.S.-China trade tensions, surging Fed rate cut expectations, and intensifying safe-haven demand. The metal remains well bid after breaking through a key psychological level, with a session low of $4140.73 and Tuesday’s close at $4142.62.

At 11:28 GMT, XAU/USD is trading $4202.35, up $59.73 or +1.44%.

Fed Rate Cuts and Trade Escalation Fuel Gold Rally

A combination of dovish Fed commentary and geopolitical instability is driving the latest leg of the gold rally. Federal Reserve Chair Jerome Powell’s remarks this week reinforced market expectations for a 25 basis-point rate cut in both October and December, now priced in with 96% and 93% probabilities respectively.

At the same time, U.S.-China trade friction intensified after President Trump signaled Washington could sever certain trade ties, a day after both nations imposed retaliatory port fees.

This broad-based risk aversion, combined with the weaker U.S. dollar, continues to support bullish flows into gold, which is now up roughly 58% year-to-date. The metal’s safe-haven appeal remains intact as traders also watch the unresolved U.S. government shutdown and its potential to disrupt data flows and policy decisions globally.

RSI Warning, but Price Action Still Bullish

Despite the record high, traders are watching for signs of exhaustion. Gold’s Relative Strength Index currently prints at 85 — an overbought signal under traditional definitions — but this indicator is not predictive. It only confirms a potential top after a lower close. A reversal pattern will only emerge if gold prints a lower close following a higher high, which would mark a closing price reversal top.

Importantly, some traders relying on RSI signals to fade strength have been caught on the wrong side for over a week. With no technical resistance above current levels, price action becomes key. A break below Tuesday’s low or the prior swing bottom at $3944.43 would raise red flags for bulls.

Intraday Correction Watch: $4062.18 in Play

If today’s high at $4218.41 holds, and momentum stalls, traders will be watching $4062.18 — the 50% retracement of the $3944.43 to $4179.94 swing — as the next meaningful support level. That level may come into play if an intraday or daily closing price reversal triggers broader profit-taking.

Gold Price Forecast: Bullish but Overextended

The near-term outlook remains bullish, driven by dovish Fed bets and heightened geopolitical risk.

However, with momentum stretched and no nearby technical resistance, price action should be monitored closely for reversal signals.

A daily close below $4142.62 would confirm a potential short-term top, but until that occurs, the bulls remain in control.

More Information in our Economic Calendar.