Gold price prediction: XAU holds near record as U.S. gridlock fuels demand

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Gold steadies near record

Highlights

- Gold traded around $3,870, extending gains as safe-haven flows surged on U.S. shutdown fears.

- The metal remains in a rising channel, with resistance near $3,880 and support at $3,800–$3,705.

- Rate-cut expectations ahead of the Fed’s October meeting strengthen gold’s long-term outlook.

Congress remains unable to agree on a temporary funding bill, pushing the government closer to a shutdown that would furlough hundreds of thousands of workers and disrupt critical services. President Trump’s comments on potential workforce reductions have added to investor unease, while the risk of delayed economic data—most notably September’s nonfarm payrolls—has amplified the case for gold as a defensive asset.

XAU price dynamics (Source: TradingView)

The prospect of weaker labor reports and limited visibility ahead of the Federal Reserve’s late-October meeting has drawn additional buyers into precious metals. In times of policy and fiscal gridlock, investors traditionally increase exposure to assets less vulnerable to political shocks, keeping gold’s appeal elevated.

Technicals point to bullish continuation

The technical backdrop reinforces the bullish narrative. Gold has been trending within a rising channel since mid-August, supported consistently by the 20-day and 50-day exponential moving averages, now at $3,817 and $3,769. The latest climb carried prices toward the upper boundary near $3,880.Momentum indicators also suggest resilience. The Relative Strength Index stands at 64, close to but not yet in overbought territory. A breakout above $3,880 could open a path toward $3,920 and the symbolic $4,000 level. On the downside, support rests at $3,800, followed by the 100-day EMA at $3,705. Traders note that unless gold falls below the $3,750–$3,770 band, the broader bullish structure remains intact.

Rate-cut expectations underpin outlook

Macroeconomic factors are further aligning with the technical picture. Recent U.S. labor market data showed job openings rising while hiring slowed, pointing to a cooling jobs environment. This provides the Federal Reserve with scope to ease monetary policy.

Markets now price in a near-certain rate cut at the October policy meeting, with a 76% probability assigned to another in December. Lower interest rates reduce the opportunity cost of holding gold, making it more attractive relative to yield-bearing assets. Analysts argue that the combination of safe-haven flows and dovish policy expectations leaves gold well positioned for further upside into year-end.

Previously, we discussed gold’s role as a defensive asset whenever political instability in Washington coincided with looser monetary policy. The latest rally confirms those dynamics are again at play, with both safe-haven demand and rate expectations reinforcing the metal’s climb.

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