Gold prices struggled at the $4,380 mark before falling over $100, influenced by positive market sentiment and a stronger US Dollar. President Trump’s meeting plans with Chinese President Xi, along with reassurance regarding Taiwan, helped calm the markets. From a technical perspective, a Double Top pattern around $4,380 suggests further declines may occur. Gold is now close to $4,260, with the neckline of the Double Top at $4,190 acting as a crucial point. A drop below this level could confirm a decline toward $4,095, and possibly down to the key $4,000 mark.

Gold As A Safe Haven Asset

Gold is known for its value retention and is considered a safe-haven asset in uncertain times. Central banks, particularly in emerging economies like China and India, bought a significant 1,136 tonnes of gold in 2022. Gold’s price usually rises when the US Dollar falls or interest rates are low. It is also affected by geopolitical tensions and fears of recession, with a stronger Dollar often leading to stabilization or declines in gold prices. Given the resistance at $4,380 and the recent price drop, we anticipate short-term weakness. Improved market sentiment due to reduced US-China tensions is boosting the US Dollar, diverting investments away from safe-haven assets. This means gold’s potential for price increases may be limited in the weeks ahead. The Dollar’s strength is backed by recent economic data. Last week’s US Consumer Price Index report indicated core inflation stubbornly sits at 3.1%. This suggests that the Federal Reserve may maintain higher interest rates for an extended period. Consequently, the S&P 500 has increased over 3% in the past week, showing a clear shift toward riskier assets.

Market Considerations For Traders

We are keeping a close eye on the important support level at $4,190, the low from October 17. If this neckline breaks, it would confirm the bearish Double Top pattern, indicating that the recent upward trend has ended. Technical signals, like the bearish divergence on the 4-hour RSI, support the possibility of further declines. For traders using derivatives, this situation presents an opportunity to consider bearish positions. A fall below $4,190 could lead to selling that targets the October 14 low of $4,095, with the ultimate aim being the psychological level of $4,000. Strategies could include purchasing put options or establishing short futures positions to take advantage of this expected movement. However, if prices do not break below $4,190, this could invalidate the immediate bearish outlook. We should be cautious, as a strong bounce from this level might test the significant resistance at the all-time high of $4,380 again. A rise above this peak would end the Double Top pattern and suggest a return to a longer-term bullish trend. Looking back, this price behavior is similar to what we observed in early 2024, when gold corrected after reaching new highs before finding support. While long-term buying by central banks, which broke records in 2022, continues to support prices, recent World Gold Council data for Q3 2025 showed a slight decrease in purchases. This may allow bears to take control in the near term. Create your live VT Markets account and start trading now.

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