Gold prices are on track for a seventh consecutive weekly advance, buoyed by safe-haven flows as the U.S. government shutdown complicates the Federal Reserve’s already fragile rate-cut trajectory.
Spot gold held near $3,860/oz in Friday’s Asian session after retreating modestly in the previous session. Thursday’s pullback followed profit-taking, with prices briefly hitting fresh record highs earlier in the day. Despite the pause, the broader trend remains decisively bullish, though overbought conditions suggest growing risk of volatility.
Shutdown Complicates Rate Signals
The U.S. government shutdown has delayed the release of the Nonfarm Payrolls (NFP) report, forcing investors to rely on private-sector surveys for labour market insights. On Thursday, data from Challenger, Gray & Christmas showed that U.S. employers scaled back hiring plans and announced fewer job cuts in September, underscoring a cooling jobs market.
Fed policymakers have acknowledged the challenge. Chicago Fed President Austan Goolsbee noted this week that without official government data, the central bank will face a more difficult task in assessing the economic outlook. Nevertheless, money markets remain almost fully priced for a 25-bps rate cut in October, with another widely expected in December.
Lower rates typically bolster demand for non-yielding assets like gold, further strengthening its appeal amid fiscal and economic uncertainty.
Record Run Continues
Gold has already surged more than 45% year-to-date, marking the strongest performance since 1979. The rally has been fuelled by:
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Central bank purchases at near-record levels.
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Increased inflows into gold-backed ETFs.
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A weaker dollar and ongoing Fed easing expectations.
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Heightened geopolitical and domestic U.S. uncertainty.
Technical Outlook
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Resistance: $3,895 (recent peak), followed by the psychological $4,000 mark.
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Support: $3,820 (short-term floor), with stronger demand seen near $3,780.
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Momentum: Overbought on the RSI and Bollinger Bands, suggesting potential near-term consolidation.
Outlook
Gold’s seventh weekly gain underscores the strength of its underlying trend, but stretched technical may invite short-term corrections. Unless U.S. fiscal tensions ease or the Fed signals a shift away from its easing bias, dips are likely to remain attractive to buyers.
Bias: Buy on dips toward $3,820–3,780 zone, with upside targets extending toward $3,895 and $4,000.
