Gold Dips as Global Tightening Bias Undermine Safe-haven

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30 October 2025, 07:01

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Key Takeaways:

*Gold extends losses as global central banks signal tighter monetary conditions.

*The Federal Reserve turns unexpectedly hawkish, triggering a rebound in the U.S. dollar.

*Optimism over a potential U.S.–China trade deal reduces safe-haven appeal.

Market Summary:

Gold prices continued to fall this week, extending a multi-session decline amid a sharp rebound in the U.S. dollar and a shift toward tighter global monetary conditions. The metal remains under sustained pressure following the Federal Reserve’s uncertainties and improved global risk sentiment tied to the U.S.–China trade progress.

While the Fed cut rates by 25 basis points to a target range of 3.75%–4.00%, the central bank surprised markets by indicating plans to tighten monetary policy in other areas. Specifically, policymakers confirmed the end of quantitative tightening (QT) from December 1, suggesting reduced asset purchases and liquidity withdrawal from financial markets. This policy combination — slower balance-sheet expansion despite rate cuts — effectively reduces money supply, supporting the U.S. dollar and pressuring non-yielding assets like gold.

Simultaneously, U.S. President Donald Trump’s optimistic remarks on the trade front fueled risk-on sentiment. Trump stated that both sides were “very close” to reaching a “really fair and great deal,” including potential tariff reductions in exchange for China’s commitment to halt exports of fentanyl precursors. These developments weakened the defensive demand for gold, as investors rotated back into risk assets such as equities and commodities tied to growth.

Adding to the headwinds, global central banks have signaled a preference for tighter monetary settings.

The Bank of Japan (BoJ), under Governor Kazuo Ueda, is expected to keep rates unchanged at 0.50%, but refrain from additional easing — a move that strengthens the yen and reduces gold’s relative attractiveness in Asia.
The European Central Bank (ECB), meanwhile, continues to emphasize a “higher-for-longer” rate stance to curb inflation. Higher eurozone yields make gold — which offers no interest return — less appealing for institutional investors seeking real yield opportunities.

In essence, the coordinated bias toward policy normalization or restrained liquidity across major economies implies tighter global financial conditions, strengthening major currencies and dampening demand for gold as a non-yielding store of value.

Looking ahead, traders will monitor central bank communications, U.S.–China trade developments, and geopolitical headlines for directional cues, as these remain the dominant near-term catalysts shaping gold’s trajectory.

Technical Analysis

GOLD, H4

Gold continues its downward trajectory, currently testing key support at $3,950. A sustained break below this level could expose the next support zone at $3,870, extending the bearish momentum seen since last week.

The MACD continues to illustrate negative momentum, while the RSI remains below the midline at around 45 — both confirming continued downside bias.

Should prices stabilize above $3,950, a technical rebound toward $4,020 is possible, with the next resistance seen at $4,065.

Resistance Levels: $4,020, $4,065
Support Levels: $3,950, $3,870

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