Quick overview

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Gold (XAU/USD) fell to a three-week low of around $3,950 on Wednesday in the early Asian session. The precious metal’s appeal as a haven dwindled as optimism over the US-China trade negotiations waned. Metal traders will be watching the Federal Reserve’s (Fed) interest rate announcement.

Profit-taking is causing the price of gold to decline from its record high following significant gains in recent months.

The demand for safe-haven assets had fallen as geopolitical tensions and US-China trade tensions appear to be abating. According to US President Donald Trump, a trade deal with China should be reached in a few days.  Trump and Chinese leader Xi Jinping will attempt to finalize the initial agreement that US and Chinese officials announced on Sunday.

Wall Street remains optimistic about the precious metal because it expects the Federal Reserve to continue lowering interest rates. UBS analysts predict that gold should increase soon and reach $4,700 by the end of the first quarter of 2026. Ulrike Hoffmann-Burchardi, chief investment officer at UBS Global Wealth Management, stated last week, “We have highlighted the potential for volatility given the scale and speed of the rally, but we believe precious metals should stay supported by a combination of macroeconomic, fundamental, and momentum-driven factors.” Recent Reaffirmations from Bank of America analysts maintain their “long gold” recommendation, with predictions of a peak of $6,000 per ounce by mid-2026.

Meanwhile, Goldman Sachs has raised its previous forecast from $4,300 to $4,900 per troy ounce by the end of next year.

The increasing likelihood of a Fed rate cut could limit the decline of the precious metal. After its meeting on Wednesday in October, the US central bank is widely expected to lower its benchmark interest rate by 25 basis points (bps). This would set the Federal Funds Rate target between 3 and 75 percent, or 4 and 100 percent. Currently, the CME FedWatch tool indicates almost a 100 percent probability of a 25 bps cut. This would be the second consecutive rate cut after the September policy meeting. Lower interest rates could support gold, a non-yielding precious metal, by reducing the opportunity cost of holding it..