Has the long-inflated gold bubble finally burst, or did the precious metal rid itself of the bulls who were uncertain about the rally? Let’s discuss this topic and make a trading plan for the XAU/USD.
The article covers the following subjects:
Major Takeaways
- The end of the shutdown is helping gold.
- XAUUSD bulls are confident about the future.
- Growing uncertainty is positive for the precious metal.
- Long positions can be opened if gold consolidates above $4,140.
Weekly Fundamental Forecast for Gold
While investors debate what the macro statistics will show after the US shutdown and whether the economy will slow or accelerate, gold remains steady. Gold’s best daily rally since spring stems from confidence in the cooling US labor market. Against the backdrop of anchored inflation expectations, this paves the way for lower Fed rates, falling Treasury yields, and a weaker dollar. These factors will create an ideal backdrop for XAU/USD quotes.
Despite the bulls’ crushing defeat in October, not all of them have given up. Goldman Sachs predicts that gold will reach $4,900 per ounce by the end of 2026. JPMorgan cites figures much higher, between $5,300 and $5,600. The main reasons for the rally are portfolio diversification and central bank purchases of bullion.
Developing countries with foreign trade surpluses will see increased activity. They will invest in various assets, increasing their gold holdings. Investors will prefer to follow the lead of central banks. Judging by the record inflows of capital into Indian ETFs focused on precious metals, this process is already underway. Their purchases in 2025 are approaching $3 billion, equivalent to 26 tons. In terms of value, this surpasses the period from 2020 to 2024.
Inflows Into Indian Gold ETFs
Source: Bloomberg.
At first glance, the rise in gold prices appears to be driven by confidence in the deterioration of macroeconomic statistics and by hope for a loosening of the Fed’s monetary policy. However, what if the shutdown and the associated lack of data protected against uncertainty?
As rumors of the government resuming work began to spread in the market, investors once again began to speculate on the state of the US economy. Coupled with the growing risk of the Supreme Court overturning tariffs and the potential chaos in financial markets, this is driving up the uncertainty index. As a rule, its growth becomes a tailwind for the XAU/USD.
Gold Price and NFIB Uncertainty Index
Source: Bloomberg.
Gold managed to rebound from its swing lows, suggesting that the gold bubble may not have burst. The current environment of a weak US dollar, driven by lower Fed rates and a decline in investor confidence, presents a favorable opportunity for XAU/USD quotes. The geopolitical landscape in Eastern Europe remains unsettled, indicating that the global order continues to be bipolar. The so-called East will continue to increase its reserves and adhere to a policy of de-dollarization.
Weekly Trading Plan for XAUUSD
Indeed, gold experienced a significant shift, prompting speculators to flee the market. The collapse of XAU/USD looked like a bubble, but it may actually be a period of adjustment and realignment. The future of gold will depend on its ability to remain above $4,140 per ounce. If it succeeds, it may surge to $4,200 and $4,300. If not, the precious metal will face a sell-off.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of XAUUSD in real time mode
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