Gold (XAUUSD) Price Forecast: Reversal Top Hints at Near-Term Correction Ahead

Profit-Taking Hits Gold After $3871.89 High

Gold prices reversed sharply lower on Tuesday after an early session surge to a record high of $3871.89 triggered profit-taking and fresh short interest. That high fell just short of the key swing chart target at $3879.64, prompting sellers to fade the rally. Spot gold is now on track to post a potentially bearish closing price reversal top — a technical setup that could trigger a 2–3 day correction if confirmed.

The question now is where buyers will step back in. Several retracement levels are in play: the short-term range between $3717.52 and $3871.89 yields a 50% pivot at $3794.70. Below that, successive swing bottoms at $3749.92 and $3742.36 offer near-term value zones. Broader downside targets include $3691.82, the 50% level of the intermediate $3511.75–$3871.89 move, and $3591.72 from the long-term $3311.56–$3871.89 range.

At 11:11 GMT, XAU/USD is trading $3809.61, down $24.27 or -0.63%.

Fed Rate Cut Bets Grow as U.S. Data Risks Delay

Fundamental support for gold remains intact, driven by rising Fed rate cut expectations and political uncertainty. Markets are pricing in an 89% chance of a 25 bp cut at the Fed’s October meeting, per CME FedWatch. Traders now see 42 bps of easing by December, with 104 bps priced in through 2026.

But the looming U.S. government shutdown is complicating the outlook. If funding lapses Tuesday at midnight ET, the Labor Department confirmed it would halt data releases — including Friday’s nonfarm payrolls report. That would leave the Fed without fresh labor data heading into its next policy meeting, potentially reinforcing the dovish tilt.

To understand gold’s role within global markets, it’s essential to study Why And How To Trade Commodities: A Complete Introduction

Dollar Weakens as Safe Havens Outperform

The dollar index slipped 0.1% to 97.785 as shutdown concerns and falling Treasury yields put pressure on the greenback. The dollar lost ground to both the yen (down 0.4% to 148.02) and the Swiss franc (down 0.2% to 0.796), with safe-haven currencies catching a bid. Strategists at ING say USD/JPY may remain a favored short in a prolonged shutdown scenario.

Treasury yields were mixed, with the 10-year at 4.143% and the 2-year down to 3.619%. Historically, full shutdowns have provided modest support for Treasurys and had mixed impact on risk assets.

Gold Price Forecast: Bearish Reversal in Play, But Watch Support Zones

With today’s rejection at $3871.89 and a potential closing price reversal top forming, the near-term bias in gold shifts bearish. A confirmed reversal would open the door to a pullback toward $3794.70, with deeper corrections targeting $3749.92 and $3742.36.

That said, the long-term uptrend remains intact while prices hold above the 50-day moving average at $3493.40. A close below $3742.36 would increase downside momentum, but buyers may look to re-enter near $3691.82 or $3591.72 if the Fed narrative remains dovish.

Stay nimble — key levels are in play and policy clarity may be delayed if Friday’s jobs report is shelved.

More Information in our Economic Calendar.