Amid expectations of a potential U.S.-China trade agreement and considering the Federal Reserve's possible shift towards a less dovish monetary policy stance, gold prices have recently experienced a significant correction as traders lock in profits. The Federal Reserve announced a 25 basis point interest rate cut on Wednesday, aligning with market consensus. Chair Jerome Powell emphasized that if rate reductions hinder the Fed's access to crucial employment and inflation data, policymakers may adopt a more cautious approach. According to the CME FedWatch Tool, market probability of a 25 basis point rate cut in December stands at 72.8%, down from 91.1% just a week prior. According to a report by Reuters, the latest findings from the World Gold Council indicate that "global gold demand in the third quarter increased by 3% year-on-year to 1,313 metric tons, reaching a historic high due to a surge in investment demand," which has also driven a rebound in gold prices. Currently, it remains to be seen whether gold can regain its upward momentum as the U.S. dollar appreciates against major currencies to a two-month high. Additionally, the ongoing contraction in China's manufacturing sector poses a negative impact on gold prices. China, being the world's largest gold consumer, saw its official Manufacturing Purchasing Managers' Index (PMI) for October fall from 49.8 in September to 49.0, the lowest in six months. This suggests that, amid signs of a government shutdown and no imminent reopening, the market is acting blindly due to a lack of data, while persistent concerns over the U.S. economy and fiscal policy may provide some cushion against further declines in gold.

The U.S. federal government shutdown has entered its 30th day, intensifying the political deadlock and escalating risks to economic stability and societal functions. Vice President Vance warned that a prolonged shutdown could significantly disrupt transportation and travel during the holiday season. Maryland has declared a state of emergency and allocated US$10 million to mitigate potential disruptions to the Supplemental Nutrition Assistance Program (SNAP). The shutdown erodes public confidence in government governance and heightens uncertainty regarding a soft landing for the economy, thereby reinforcing gold's role as a safe haven during political turmoil. Major global central banks maintain dovish monetary stances, further solidifying market expectations for a policy shift by the Federal Reserve. The Bank of Japan and the European Central Bank's latest monetary policy meetings both decided to hold interest rates steady, reflecting the overall global monetary policy stance remains accommodative. Despite U.S. Treasury Secretary Bessent's slight reservations regarding Fed Chair Powell's hawkish rhetoric, market expectations for a Federal Reserve rate cut in December remain high at around 70%. This dovish outlook continues to suppress real yields and the U.S. dollar, creating a favorable financial environment for non-interest-bearing assets such as gold.

In the 1H timeframe, the price is oscillating between the upper and lower Bollinger Bands. The MACD is currently experiencing a second retracement above the zero-axis. If the MACD line and signal line form a golden cross above zero-axis again, a bullish trend is likely to develop. Resistance levels are observed near the EMA200 at approximately 4045 and the psychological round number at 4100. The RSI stands at 54, indicating a predominantly cautious market sentiment in the short term. In the 1D timeframe, the MACD has formed a death cross, with the MACD line and signal line still retracing towards the zero-axis, suggesting the correction is incomplete. The RSI is at 51, with investors remaining cautious. If the price can re-establish above the EMA12, a potential rally toward the resistance range around 4133 could occur. It is recommended to go long at the lows.

Trading Direction: Buy

Entry Price: 3965

Target Price: 4300

Stop Loss: 3750

Support: 3900, 3800, 3600

Resistance: 4380, 4500, 5000