Gold kept recording new highs, trading at levels close to $3,870, as safe-haven buying picked up pace during the US government shutdown and rate-cut speculation in the Federal Reserve. The shutdown, which was induced by Congress’s inability to approve a funding bill, has halted numerous federal activities and undercut the US Dollar, making gold more appealing to foreign purchasers. Economic indicators painted a mixed picture with decelerating manufacturing expansion, weaker-than-predicted ADP jobs, and falling consumer confidence, which supported expectations of eventual Fed easing. While XAU/USD probed the $3,900 psychological threshold, some profit-taking was seen, although technical factors are indicative that the bigger trend remains in place, buttressed by major moving averages at $3,850–$3,772.
KEY LOOKOUTS
• Track developments from the shutdown, such as furloughs, delayed economic reports, and possible political solutions that may impact safe-haven demand.
• Look out for Fed clues and market pricing of possible interest rate reductions in October and December, which may still bolster gold prices.
• Major reports such as ADP jobs, Nonfarm Payrolls (NFP), and PMI updates will shape sentiment and gold demand.
• Near-term support at $3,850 and $3,819 (21-period SMA) and resistance at the $3,900 psychological level will be pivotal for near-term price action.
Gold keeps rising as investors take shelter in the face of the US government shutdown and increasing expectations for Federal Reserve rate reductions. Political stalemate has dented the US Dollar, making gold more attractive to foreign buyers, while less-than-stellar economic reports, including softer ADP jobs, weakening manufacturing expansion, and softening consumer confidence, have strengthened the argument for additional Fed stimulus. XAU/USD recently tested the $3,900 threshold but encountered some profit-taking, with technicals indicating that the overall uptrend is still in place, underpinned by major moving averages in the $3,850–$3,772 region.
Gold rose to all-time highs around $3,870 as safe-haven demand was driven by the US government shutdown and expectations of dovish Fed. Soft economic data and a weaker US Dollar have further spurred the rally, with technical levels around $3,850 serving as important support.
• Gold (XAU/USD) hit a new all-time high around $3,895 with safe-haven demand.
• The US government shutdown discredited the US Dollar, which made gold more desirable for foreign investors.
• Expectations of a Fed rate cut are high, with market sentiment pricing in a 95% likelihood of a 25 bps cut in October.
• US economic data was mixed: soft ADP jobs, decelerating PMI growth, and falling consumer confidence.
• XAU/USD ran into resistance around the $3,900 psychological level, inducing some profit-taking.
• Near-term technical support appears at $3,850–$3,819, with stronger support around $3,772.
• In spite of short-term retreats, the larger picture trend is intact, underpinned by major moving averages and safe-haven flows.
Gold remains in favor with investors as safe-haven buying increases during the US government shutdown and expectations of Federal Reserve interest rate cuts. The Washington political impasse has shut down much of the federal government, causing economic uncertainty and piling pressure on the US Dollar. Soft economic reports, such as disappointing ADP employment numbers, decreasing manufacturing activity, and falling consumer confidence, have added to gold’s appeal as a solid value holder during uncertain times.
XAU/USD Daily Chart Price
SOURCE: TradingView
The rally in the metal is a sign of more general concern about economic stability and geopolitical risk, and markets are watching closely what happens in Washington and forthcoming Fed policy moves. Investors are keeping an eye on upcoming economic reports, such as Nonfarm Payrolls and PMI numbers, that may shape market mood. With these conditions, gold has been a favored instrument for hedging against uncertainty, and demand is poised to remain firm as long as there are political and economic risks.
TECHNICAL ANALYSIS
XAU/USD is in a solid uptrend, well above major moving averages. The initial support is seen around $3,850 with the 21-period SMA at $3,819 and the 50-period SMA at $3,772 providing further cushions to buyers. The $3,900 level is a psychological resistance, and Relative Strength Index (RSI) on the 4-hour chart reveals a bearish divergence, suggesting upside momentum could be fading. Even so, dips towards support levels will find renewed buying at them, maintaining the overarching bullish trend.
FORECAST
Gold may maintain its momentum higher if safe-haven buying continues to hold firm and Fed rate-cut expectations become firmer. A clean break above the $3,900 psychological mark could clear the way towards new all-time highs, with even more buying from retail and institutional investors. Geopolitical tensions or surprise economic vulnerabilities might turn the rally into a runaway, adding to gold’s appeal as a hedge.
On the negative side, a US government shutdown resolution or stronger-than-expected economic statistics can calm safe-haven flows, leading to short-term profit-taking. Important support levels at $3,850–$3,819 and lower at $3,772 will be essential to contain losses. A break below these areas could see a deeper correction but the larger uptrend will likely hold unless there is increased selling pressure.
