Gold climbed back above $4,100 on Thursday, with XAU/USD trading at $4,145, up 1.1% as investors repositioned ahead of Friday’s critical U.S. inflation report. The move follows a sharp two-day selloff that included Tuesday’s steepest one-day drop in five years.
The rebound comes amid renewed geopolitical tensions and a slight softening in former President Donald Trump’s trade rhetoric toward China, factors that have revived demand for the traditional safe haven. Trump’s administration announced fresh sanctions on Russian oil giants Lukoil and Rosneft over Moscow’s war in Ukraine, bolstering gold’s appeal.
At the same time, the White House is reportedly preparing sweeping new export controls on U.S.-made software bound for China, according to people briefed on the matter. The move aims to retaliate against Beijing’s recent restrictions on rare-earth exports and port fees on American-flagged vessels, raising the risk of renewed tech-sector friction between the world’s two largest economies.
XAU/USD’s rally is notable given the prevailing headwinds. The dollar is firmer and Treasury yields are rising. The ICE U.S. Dollar Index gained 0.13% to 99.01, while the 10-year yield climbed four basis points to 3.997%. Real yields, which typically weigh on non-yielding assets like gold, rose to 1.717%.
Despite the volatility, gold remains up nearly 57% year to date, underscoring its resilience amid persistent macro uncertainty. Markets are now focused on Friday’s September Consumer Price Index report, with economists forecasting both headline and core inflation at 3.1% year over year. Traders have priced in a 98% probability of further Federal Reserve rate cuts through 2025, with expectations for around 100 basis points of easing in 2026.
JPMorgan analysts added fuel to the bullish case, forecasting gold could average $5,055 an ounce by the fourth quarter of 2026, driven by sustained investor demand and central bank purchases averaging 566 metric tons per quarter next year.
Technical Overview: Eyes on $4,200
XAU/USD’s recovery has stalled just below Wednesday’s high of $4,161. A decisive break above that level could open a path toward $4,200, with subsequent targets at $4,250 and the psychological $4,300 mark. The all-time high of $4,380 and eventually $4,400 loom if momentum builds.
On the downside, immediate support lies at $4,100, followed by $4,059, the high from October 8, and $4,004, the low from October 22. A break below $4,004 would signal heightened risk of a deeper correction.
For now, XAU/USD’s ability to rally despite a stronger dollar and higher yields suggests underlying demand remains robust as traders await Friday’s inflation data.
