Gold Price Forecast - XAU/USD Drops to $4,025 as Fed Hawkish Tone and Strong Jobs Data Drive Dollar Higher

Gold (XAU/USD) Slides Toward $4,025 as Fed’s Hawkish Tone and Strong Jobs Data Challenge Bulls

Gold prices have reversed earlier gains as XAU/USD falls to around $4,025 per ounce, down from last week’s high near $4,100, amid resurgent U.S. dollar strength and diminishing bets on a Federal Reserve rate cut in December. The metal’s momentum has weakened sharply following hawkish FOMC minutes and a strong U.S. labor report that reignited yield pressures. The renewed resilience of the U.S. Dollar Index and an uptick in Treasury yields have turned investor sentiment defensive, pushing gold into a correction phase after an aggressive year-to-date rally exceeding +50% in 2025.

Stronger U.S. Labor Market and Delayed NFP Report Shift Policy Outlook

The delayed September Nonfarm Payrolls report delivered 119,000 new jobs, more than double the market forecast of 50,000, while the unemployment rate edged up slightly to 4.4% from 4.3%. The data—released late due to the government shutdown—signaled a U.S. labor market that remains resilient but uneven, undermining expectations of a near-term policy cut. The figures fueled a rebound in the dollar and drove spot gold down to $4,058 per ounce, its lowest level since early November. Analysts across trading desks noted that the labor beat gave the Fed further justification to “proceed slowly” in its easing cycle, with the CME FedWatch tool now assigning only a 39.8% probability of a December rate cut, down from roughly 70% two weeks prior.

Fed Division and Higher-for-Longer Rates Pressure Gold Bulls

Minutes from the October FOMC meeting exposed a split among policymakers. Several participants saw justification for another cut if the labor market cooled further, while “many others” argued that holding the benchmark rate at 4.00% would maintain stability until stronger evidence of disinflation emerges. This debate has eroded gold’s policy tailwinds and revived the higher-for-longer narrative. Vice Chair Jefferson reiterated his intention to move “gradually,” reinforcing the Fed’s cautious stance. The result has been renewed buying in the dollar, with yields on 10-year Treasuries steady above 4.07%, while the Bloomberg Dollar Spot Index strengthened 0.1% to $4,082.90 at Friday’s open, keeping dollar-denominated assets under strain.

Technical Landscape: $4,000 Becomes the Line of Defense for XAU/USD

Technically, gold remains at a crucial juncture. The pair trades just above its 20-period SMA at $4,031, which aligns with the 4-hour rising trendline from October’s low. Immediate resistance stands at $4,090, followed by $4,210, the November high, and $4,240, a previous support-turned-resistance level. On the downside, $4,025 and the psychological $4,000 mark are key to preserving medium-term structure. A breakdown below $3,997—the 78.6% Fibonacci retracement of the November rally—would open the door to $3,970, and then $3,930, a support level last tested on November 4. The MACD has slipped below zero, showing fading momentum, while the RSI at 43.2 confirms a shift toward bearish bias without entering oversold territory.

Physical Demand in India Offers Local Support as Global Traders Sell

In physical markets, demand remains resilient. According to updated data, 24-karat gold in India rose to $1,481 per ounce equivalent (₹123,400 per 10g), up 0.36% daily, supported by festival buying. 22-karat gold traded around $1,357 per ounce equivalent, maintaining a 9.3% premium over Dubai prices ($1,357 vs. $1,242). Domestic strength in Mumbai, Delhi, and Chennai helped cushion the global decline, showing that retail and jewelry demand remains firm despite international selling pressure. The Indian Express noted synchronized price increases of $5-$6 per ounce across key cities, attributed to holiday consumption and higher import duties.

Central Bank Accumulation Remains a Long-Term Pillar

Despite short-term weakness, the structural demand picture remains intact. Central banks have continued aggressive gold accumulation in 2025, led by China, India, and Turkey, with total purchases exceeding 80 tonnes monthly on average. UBS raised its mid-2026 forecast for gold by $300, to $4,500 per ounce, citing continued diversification away from the dollar and sovereign hedging against currency volatility. Institutional ETF holdings also rose modestly, with net inflows of $1.2 billion into gold-backed products in November.

Comparative Performance Across Metals and Commodities

Gold’s outperformance relative to other metals remains notable, though narrowing. Silver declined 1.7% to $50.47 per ounce, platinum fell 2.3% to $1,510.70, and palladium edged lower 0.1% to $1,379.00. Meanwhile, WTI crude slid to $57.99 per barrel (–1.56%), and natural gas rose modestly to $4.40 ( +0.78%), underscoring that commodity volatility remains macro-driven. The Dow Jones Industrial Average (DJIA) advanced 1.46% to 46,459, while the NASDAQ 100 gained 1.10%, reflecting a shift from safe-havens back into equities.

Macro and Risk Sentiment Drivers

Gold’s latest correction aligns with global repositioning out of risk hedges as liquidity tightens ahead of the year-end. Analysts warn that the combination of thin Thanksgiving-week volumes and profit-taking could exacerbate intraday swings. With the next major macro catalyst being the Federal Reserve’s December 10 meeting, traders are bracing for volatility between $3,970 and $4,130. A hold decision from the Fed could briefly lift the dollar further, while any surprise dovish tone might trigger a rebound toward $4,180–$4,240.

Investor Positioning and Sentiment Shift

Speculative longs have been trimmed by roughly 18% week-over-week, according to latest CFTC data, while short interest has increased slightly to its highest level since May 2024. Hedge-fund exposure to gold ETFs fell by $420 million in the last two weeks, reflecting near-term caution. Nonetheless, macro-fund managers maintain exposure to physical bullion as a hedge against monetary policy error, geopolitical risk, and sustained fiscal deficits.

Outlook and Verdict on Gold (XAU/USD)

Gold currently trades around $4,043 per ounce, holding a fragile position above critical support. The near-term bias is bearish, with momentum pointing toward a test of $4,000 and possibly $3,970 if dollar strength persists. However, medium-term fundamentals remain constructive, supported by central bank demand, inflation uncertainty, and geopolitical hedging.

Verdict:

• Short-Term (1 Month): Sell → Target $3,970

• Medium-Term (3–6 Months): Hold → Range $4,000 – $4,240

• Long-Term (12 Months): Buy → Target $4,500

The XAU/USD trajectory now depends on whether the $4,000 floor can withstand a hawkish Fed cycle. If that support holds, gold could stabilize and resume its climb toward record territory in 2026; a clean break below would confirm a broader correction phase before renewed accumulation begins

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