Gold is correcting following Trump’s softer rhetoric

Gold is showing subtle signs of weakening during Monday’s early trading, continuing its Friday’s correction from an all-time high of $4,380 per ounce. The downward momentum was triggered by President Trump’s softer rhetoric on US-China trade relations, which reduced demand for safe-haven assets.

Gold’s retreat appears natural, considering its explosive gain of over 6% last week. The price set a new record high due to geopolitical tensions and rising expectations of Federal Reserve’s (Fed) interest rate hikes. However, investors are now taking profits amid improving US-China trade relations.

The technical setup signals a short-term correction. After reaching key resistance around $4,380, a red candlestick with a long lower shadow emerged on the chart, pointing to seller activity and a subsequent recovery from intraday lows. Indicators suggest a potential slowdown in the uptrend. The Stochastic Oscillator has reversed downward but remains in overbought territory. The %K and %D lines are forming a bearish divergence. The Chaikin Oscillator, while being in the positive zone, is declining, reflecting a weaker buying interest.

Gold's volatility may increase due to the ongoing US government shutdown, which is depriving the market of important economic data and undermining investor confidence. However, profit-taking after significant gains appears to be the key driver in the near term. The combination of technically overbought conditions and a temporary easing of geopolitical tensions sets the stage for further price corrections.

Consider the following trading strategy:

Sell gold at the current price or as the price makes another attempt to reach $4,380. Take profit: $4,113. Stop loss: $4,380.

This forecast is valid from October 20 to October 27, 2025.