Gold (XAU/USD) remains under pressure, trading below the key $4,000 psychological level during Tuesday’s Asian session. The precious metal continues to face selling interest as the US Dollar (USD) extends its rally to a fresh multi-month high, supported by the Federal Reserve’s (Fed) hawkish stance. This persistent USD strength, coupled with the risk-on tone in global markets, is weighing on the non-yielding yellow metal.

Despite the weakness, downside pressure on Gold appears limited due to ongoing concerns over a prolonged US government shutdown and persistent geopolitical tensions, both of which are helping to maintain some safe-haven demand. The combination of these mixed drivers has led to a period of range-bound and corrective price action, which analysts view as a bearish consolidation phase following the metal’s record highs in October.

Fed’s hawkish tone continues to support the USD

The Fed’s recent communication remains the primary headwind for Gold. Fed Chair Jerome Powell signaled last week that another rate cut in December is not guaranteed, emphasizing a data-dependent approach going forward. His remarks cooled expectations for aggressive easing and sparked another round of USD buying, pushing the currency to its strongest level since early August.

According to the CME FedWatch Tool, traders are currently pricing in around a 65% probability of a rate cut at the December 9–10 FOMC meeting, down from over 90% a week earlier. This recalibration in Fed expectations has reduced the appeal of non-interest-bearing assets like Gold, reinforcing the short-term bearish bias.

Government shutdown and geopolitical risks cap losses

Meanwhile, the US government shutdown continues into its sixth week, marking one of the longest in history. Political gridlock in Congress has delayed the passage of the latest funding bill, and uncertainty surrounding the economic impact of the shutdown is beginning to surface. Analysts warn that prolonged government paralysis could weigh on US growth prospects — a scenario that might limit USD upside and help Gold find a floor.

At the same time, geopolitical tensions remain in focus. Investors are closely monitoring developments in Eastern Europe and the Middle East, as well as evolving dynamics in US-China trade relations, which could reinforce safe-haven demand if risks escalate.

Technical outlook: Gold consolidates below $4,000

From a technical perspective, Gold’s recent price action suggests a potential continuation of the corrective decline unless buyers regain control above the $4,000 handle. The failure to hold above the 200-hour Simple Moving Average (SMA) reinforces near-term weakness, while neutral oscillators on the daily chart advise caution before placing fresh bearish bets.

A clear break below $3,963–$3,952 (the previous day’s swing low) would expose the metal to further losses toward $3,940, followed by $3,910–$3,900, and potentially last week’s low around $3,886.

Conversely, sustained buying above $4,000 could trigger a short-covering rally toward $4,025 (200-hour SMA resistance) and $4,045–$4,046, with a decisive move beyond that zone paving the way for a retest of $4,075 and the $4,100 round figure.

Outlook

Overall, Gold remains on the defensive, constrained by the Fed’s hawkish tone and broad USD strength. However, macro uncertainties — including the prolonged US shutdown and geopolitical instability — continue to offer underlying support, likely keeping the metal from a deeper decline in the near term.

Traders should monitor upcoming FOMC member comments for clues on the Fed’s next policy move, while also keeping an eye on overall risk sentiment for potential short-term trading opportunities in XAU/USD.