Gold faces a pullback on Monday but with limited downside; the strength of the US dollar and risk sentiment are key factors

What Technicals Tell Us

Gold/USD once again fell below $4050 during Monday’s Asian session, continuing to operate under pressure. From the chart, the upward trend line since late October remains supportive, currently around $4030. This line also coincides with the 200-period EMA on the 4-hour chart, making it a key support level at present.

If this level is effectively broken, the downside space will open up—first, to see if the psychological level of $4000 can hold, followed by last week’s low at $3968-$3967. Further support levels include $3931, $3900, and the October low at $3886.

Conversely, if gold can stabilize above the supply zone at $4080, it may continue challenging the $4100 level and look further towards resistance around $4152-$4155. If momentum is strong enough, it could even retake the $4200 round number.

Fundamentals: Strong Dollar Suppresses Safe-Haven Buying

The dollar remains near its high since late May, which is the main reason for gold’s pressure. While Fed officials’ comments are somewhat divided, they generally support a strong dollar.

Last Friday, NY Fed President Williams took a dovish stance, saying current policy is at a moderate restrictive level with room for rate cuts this year. Traders immediately responded, with market expectations of about a 67% chance of a Fed rate cut in December. However, Dallas Fed President Logan’s hawkish stance pulled back, calling for maintaining the policy rate in the short term, which helped the dollar continue to strengthen.

The rise in risk assets is also diverting attention from gold. Optimism about continued rate cuts by the Fed in December has boosted Asian stock markets on Monday, recovering some recent losses. Improved investor sentiment reduces demand for safe-haven assets, which is another reason gold has been oscillating within a familiar range since last week.

Geopolitical Risks Temporarily Difficult to Erupt

Although stocks and the dollar are suppressing gold, geopolitical uncertainties still provide some protection for precious metals.

The Russia-Ukraine war continues to escalate—Ukraine launched large-scale drone attacks on thermal power plants in Moscow, while Russia claims to have occupied three villages in the east. U.S. President Trump set a deadline of November 27 for Ukraine to approve a 28-point peace plan. Ukraine is seeking to modify the terms, aiming to end the war without making too many concessions—this situation suggests geopolitical risks will persist and may continue to support gold.

The instability in the Middle East also remains, which is another reason markets reserve risk premiums for precious metals.

This Week’s Economic Data as a Turning Point

Traders are now focusing on the U.S. economic calendar this week. On Tuesday, attention will be on the delayed Producer Price Index (PPI), retail sales, and consumer confidence index; Wednesday will see the preliminary Q3 GDP and PCE price index.

These data are crucial for the Fed’s rate cut path and will directly influence short-term movements in the dollar chart, providing meaningful momentum for non-yield assets like gold. In other words, if economic data are weak, gold may rebound on expectations of further rate cuts by the Fed; if data are strong, the dollar could continue its rally.

Trading Recommendations

In the short term, gold needs to break below the key support at $4030 to justify further downside. Until then, ongoing geopolitical uncertainties should prevent excessive shorting. Therefore, before this week’s economic data are released, caution is advised—avoid rushing into one-sided trades.