The XAU/USD chart shows that gold recently climbed above the $4,200 mark for the first time. The upward momentum has been supported by the ongoing US government shutdown, central bank demand (with reports highlighting a sharp rise in reserves at the Reserve Bank of India), and market focus on US–China trade developments.

According to Trading Economics, on Tuesday President Donald Trump accused China of “economically hostile” behaviour, citing a halt in soybean imports, and warned of potential retaliatory measures.

After an 8% gain since the start of October, the market appears overbought, as reflected by the RSI, creating vulnerability to a correction. Today’s sharp drop from record levels (highlighted by the red arrow) may be seen in this context, yet bullish positions remain solid for several reasons.

Analysing gold price action (highlighted with bold lines), we can identify a rising channel that has remained relevant since late September. Signs of strong demand include:

→ persistent moves towards the channel’s upper boundary;

→ a steeper growth channel forming since 10 October;

→ the local $4,155 level shifting from resistance to support.

It is also notable that previous bearish attempts failed — each short-term plunge was followed by a strong rebound. Today’s correction could similarly precede further gains in gold.

Key levels to watch:

→ Psychological resistance at $4,250;

→ Boundaries of the orange channel and the blue median line.

In summary, the gold market currently appears extremely bullish, and it would likely take extraordinary events to reverse this pronounced trend.

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