Key Points
- Spot gold climbed to $3,870 per ounce, within striking distance of Tuesday’s record high of $3,866.10.
- Traders see a near-certain Fed rate cut in October, with a 76% probability of another in December.
Gold prices hovered near record territory at $3,870 per ounce on Wednesday, extending the strong rally driven by a weakening economic outlook and intensifying political uncertainty in the United States.
The precious metal is attempting to break higher as safe-haven flows accelerate ahead of a possible U.S. government shutdown.
With the Senate gridlocked between competing funding proposals, the risk of a closure at midnight looms large.
Market participants are increasingly focused on its potential duration, as a prolonged shutdown would delay the release of critical economic data, including Friday’s non-farm payrolls report. This comes just weeks before the Federal Reserve’s late-October policy meeting.
Labour Market Signals
Fresh data showed U.S. job openings edged higher in August while overall hiring slowed. This cooling in the labour market reinforces expectations that the Fed has room to continue easing.
Traders are now pricing in a near-certain 25-basis-point rate cut at the next meeting, with the CME FedWatch Tool indicating a 76% chance of an additional reduction in December.
Technical Analysis
Gold (XAUUSD) extended its bullish run, trading at $3,866.10, up 0.19% on the day, and marking fresh highs after a strong September rally. The metal continues to benefit from safe-haven demand, softer U.S. dollar momentum, and growing expectations that central banks will maintain accommodative stances into year-end.
Technically, the uptrend remains firmly intact. Price is holding above the 5-day and 10-day moving averages, with the 30-day MA providing a strong upward slope that reinforces the trend.
The breakout above the $3,800 level has unlocked further upside potential, with resistance now seen around $3,900, while initial support lies near $3,750.
Momentum also supports the bullish bias. The MACD remains in positive territory, with the MACD line diverging further above the signal line and a widening histogram. This suggests buyers still control the market, though the sharp climb leaves gold vulnerable to short-term profit-taking.
In the bigger picture, as long as gold sustains above $3,750, the path of least resistance remains upward, with traders eyeing the symbolic $4,000 mark as a potential medium-term target.
However, any cooling in geopolitical risks or a rebound in U.S. yields could trigger consolidation before the next leg higher.
Cautious Forecast
As long as the political stalemate continues and key data releases risk being delayed, gold’s safe-haven appeal is likely to keep prices elevated. Momentum traders may attempt to test the $3,900 level in the near term, though any resolution in Washington could prompt a pullback towards $3,750.
The medium-term path remains tilted upward, anchored by expectations of further Fed easing and lingering global risks.
