Gold trades steady near $4,000 as firm US Dollar and risk-on mood limit upside

• Gold remains range-bound as Fed caution and a stronger US Dollar limit follow-through buying.
• China's tax change on Gold purchases dents sentiment in the world's largest Bullion market.
• Focus turns to the October ISM Manufacturing PMI, with consensus pointing to a mild improvement to 49.5 from 49.1.

Gold (XAU/USD) kicks off the week on a cautious footing, oscillating within its established $3,900-$4,050 range as traders weigh an evolving macroeconomic backdrop. At the time of writing, XAU/USD is trading around $4,008 after briefly slipping to $3,962 earlier in the Asian session.

Gold struggles to attract follow-through buying as the US Dollar (USD) remains broadly supported by the Federal Reserve's (Fed) hawkish tilt. The central bank lowered interest rates by 25-basis-points (bps) at last week's Federal Open Market Committee (FOMC) meeting but signaled that further easing this year is unlikely. This stance has lifted the Greenback across the board, with traders scaling back expectations of another rate cut in December.

At the same time, improving risk appetite and firmer global equities limit Bullion's upside potential. The de-escalation in the US-China trade conflict has reduced demand for traditional safe-haven assets for now. However, the broader trend still tilts to the upside, underpinned by sustained institutional demand and persistent geopolitical and economic uncertainty that continue to anchor long-term support for the precious metal.

Market movers: China tax shift, ISM PMI steer early-week sentiment

• Gold came under pressure after reports that China's Ministry of Finance reduced the value-added tax (VAT) exemption on gold purchased via the Shanghai Gold Exchange and the Shanghai Futures Exchange from 13% to 6%, effective November 1, 2025.
• Analysts at ANZ Research said investors in China were "disappointed" by the new rule, which removes a key tax advantage that had long supported gold trading activity. The bank warned that the move could have far-reaching effects, given China's status as one of the world's largest gold consumers, potentially leading to adjustments in retail pricing and investment demand.
• On the trade front, the White House announced on Saturday a framework deal under which China will ease export restrictions on rare earths and suspend investigations into US semiconductor firms. In return, Washington will extend a pause on certain tariffs, including a previously planned 100% levy on Chinese goods. The announcement follows last week's meeting between US President Donald Trump and Chinese President Xi Jinping at the APEC Summit in South Korea, where both leaders agreed to a one-year trade truce lasting until November 2026.
• The Supreme Court will begin hearings on Wednesday on the legality of President Donald Trump's use of emergency powers to impose tariffs under the IEEPA. Two lower courts have already ruled these tariffs illegal, and the outcome could determine the future scope of presidential authority over trade policy.
• The United States (US) government shutdown entered its 33rd day with no breakthrough in sight, and is on track to surpass the previous record of 35 days if the stalemate continues. Senators are due to reconvene later Monday as the funding impasse continues to delay key economic data releases and stoke concerns over the broader economic impact.
• Investors turn to private data amid US shutdown-driven data drought. The October ISM Manufacturing Purchasing Managers Index (PMI) takes the spotlight today, with consensus pointing to a modest uptick to 49.5 from 49.1 in September. Comments from Fed officials Mary Daly and Lisa Cook will also be watched. Later in the week, focus shifts to JOLTS Job Openings, ADP Employment Change, ISM Services PMI, Challenger Job Cuts and the University of Michigan Sentiment Survey.

Technical analysis: XAU/USD holds steady near $4,000 amid neutral momentum

Gold lacks clear directional momentum, trading within a narrow range and stuck between key short-term moving averages on the 4-hour chart. The 50-period Simple Moving Average (SMA), near $4,026, continues to cap the upside and aligns with a former support-turned-resistance zone around $4,020-$4,050.

On the downside, the 21-period SMA at $3,996 offers immediate support. A break below this level could expose the $3,900 area, where dip-buying interest is likely to re-emerge.

Conversely, a decisive move above the confluence of the 50-SMA and horizontal resistance would open the door toward the $4,100-$4,150 region. The Relative Strength Index (RSI) stands at 49, reflecting a neutral bias and confirming the market's lack of conviction in either direction.