Gold price prediction: XAU climbs above $3,860 as shutdown risks lift safe-haven demand

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Gold rallies above $3,860 on Fed bets and shutdown fears

Highlights

- Gold hits record above $3,860, up 11% in September and 16% in Q3.

- U.S. budget standoff raises shutdown risks, boosting safe-haven demand.

- Fed rate cut bets and new tariffs strengthen gold’s bullish momentum.

The immediate catalyst has been Washington’s unresolved budget standoff. Talks between President Donald Trump and congressional leaders ended without a deal, raising the likelihood of a government shutdown starting Wednesday. Such an outcome would not only add political risk but also delay the release of critical economic data, including September’s nonfarm payrolls report.

XAU price dynamics (Source: TradingView)

For investors, that uncertainty has amplified the appeal of gold at a time when U.S. bond yields are falling and the dollar is losing traction. Market participants view bullion as a stabilizing hedge in an environment where fiscal policy is gridlocked and economic visibility is limited.

Rate expectations strengthen bullish case

Federal Reserve policy remains central to gold’s advance. Futures markets now assign near-certainty to a rate cut in October, with a 65% chance of another in December. Expectations of easing have already weakened the dollar, creating a favorable backdrop for non-yielding assets.

Adding to the complexity, Trump announced new tariffs of 10% on imported timber and lumber and 25% on cabinets and furniture. These measures risk inflating costs, reinforcing pressure on the Fed while further highlighting gold’s role as a hedge against both policy uncertainty and inflation risks.

Technical outlook signals momentum intact

On the charts, gold remains firmly within an ascending channel that has held since late August. The 20-day EMA at $3,796 and 50-day EMA at $3,753 are immediate supports, while the Parabolic SAR continues to flash bullish signals. Unless the metal breaks decisively below $3,720, the technical bias favors further upside. A sustained close above $3,860 would likely open the door toward $3,900, with deeper support around the 100-day EMA near $3,692.

In earlier coverage, we noted how gold’s climb above $3,800 was driven by falling yields and early signs of Fed easing. The extension of that breakout toward $3,860 confirms how monetary expectations and political risk have combined to reinforce bullion’s leadership in global markets. The test now lies in whether October’s data and Fed actions validate calls for sustained gains or introduce a pause in the rally.

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