Gold prices faced a sharp intraday reversal on Tuesday after briefly surging to a fresh record high of $3,871.89, where aggressive profit-taking and renewed short-selling quickly weighed on momentum. The move came just below the critical swing chart resistance at $3,879.64, triggering what appears to be the formation of a bearish reversal top — a classic technical signal suggesting that a short-term correction could unfold over the next two to three trading sessions.
Despite the recent record-breaking rally, the sharp rejection near the all-time high indicates that bulls may be taking a temporary breather. The question now is where buyers will step back in. The 50% retracement level of the short-term range between $3,717.52 and $3,871.89 comes in at $3,794.70, acting as the first key support pivot. Below this, $3,749.92 and $3,742.36 mark important swing lows where short-term value buyers may look to re-enter. A deeper retracement could expose $3,691.82 (the 50% midpoint of the broader $3,511.75–$3,871.89 range) and possibly $3,591.72, derived from the long-term $3,311.56–$3,871.89 move.
Fed Rate Cut Bets Strengthen Amid U.S. Shutdown Risk
From a macro perspective, gold remains underpinned by expectations of further Federal Reserve rate cuts and heightened political uncertainty. According to CME FedWatch, markets are now pricing in an 89% probability of a 25-basis-point cut in October, with cumulative easing of 42 bps by year-end and 104 bps through 2026.
However, the looming U.S. government shutdown threatens to complicate policy assessments. Should funding lapse at midnight ET, the Labor Department has confirmed that major data releases including Friday’s Nonfarm Payrolls would be suspended. This data blackout could leave the Fed flying blind heading into its next policy meeting, reinforcing dovish expectations and providing a potential floor for gold if risk sentiment turns defensive.
Dollar and Yields Drift Lower as Safe-Havens Outperform
The U.S. dollar index (DXY) slipped 0.1% to 97.785, pressured by falling Treasury yields and rising demand for alternative safe-haven assets. The greenback weakened against both the Japanese yen (down 0.4% to 148.02) and the Swiss franc (down 0.2% to 0.796). Analysts at ING note that USD/JPY may remain a favored short trade should the shutdown drag on, as investors continue rotating into low-volatility havens.
U.S. Treasury yields were mixed, with the 10-year yield holding around 4.143% and the 2-year easing to 3.619%. Historically, extended shutdowns tend to lend moderate support to Treasurys while producing uneven outcomes across risk assets often prompting short term corrections in equities and commodities alike.
Technical Outlook: Short-Term Pullback Likely, Long-Term Trend Intact
Technically, gold’s rejection near $3,871.89 and the emergence of a closing price reversal top suggest that a short-term correction phase is underway. A confirmed daily close below $3,794.70 would strengthen bearish momentum, opening the door to deeper tests at $3,749.92 and $3,742.36.
Nonetheless, the broader uptrend remains intact as long as prices stay above the 50-day moving average at $3,493.40. Should prices dip toward the $3,691.82–$3,591.72 zone, bargain hunters are likely to re-emerge — particularly if the Fed maintains a dovish narrative and political tensions sustain demand for safe-haven assets.
In summary, while gold’s momentum has paused near record highs, the pullback appears to be a healthy correction within a larger bullish framework. Traders should monitor $3,794.70 as a key pivot for short-term direction a sustained break above $3,871.89 would invalidate the bearish setup and signal renewed upside potential.
