Gold Near $4,000 as US Debt Crisis and Weak Jobs Fuel Safe-Haven Demand

The U.S. government shut down most operations on Wednesday as Congress failed to agree on the debt ceiling. While shutdowns often prove temporary, this one arrives at a time of declining consumer confidence and a weakening labour market. This combination increases the risk of a sharper economic slowdown and fuels safe-haven demand for gold (XAU) and silver (XAG).

Labour Market Weakness Adds to Gold’s Bullish Case

The jobs market shows clear signs of strain. The chart below shows that the unemployment level has increased above job openings for the first time since 2021.

Moreover, the temporary employment has dropped to 2.5 million, which indicates weaker business confidence in hiring.

Furthermore, the Average weekly hours worked are declining, warning of possible layoffs ahead. A low quit rate confirms that employees have little confidence in finding new work. These signals point to a cooling economy and provide support for gold as investors hedge against recession risks.

Consumer Confidence Weakness Supports Safe-Haven Demand

The Conference Board’s measure of consumer confidence remains stuck at 2020 pandemic levels, as shown in the chart below. Weak confidence signals reduced spending, which weighs heavily on growth.

An extended government shutdown will likely erode confidence further. The prospect of weaker demand and stalled economic activity encourages investors to shift capital into gold and silver.

Gold Price Analysis – Price Target of $4,000

Uncertainty over the budget standoff has already boosted interest in precious metals. Gold benefits when investors fear an economic slowdown. If liquidity contracts or stock prices retreat, gold could see strong upside momentum.

The daily chart for spot gold shows that the price has reached resistance at $3,900 and is consolidating near record levels. A breakout above $3,900 could push prices toward the $4,000 region. The momentum remains strongly bullish, indicating sustained upward pressure.

The chart below shows that gold continues to surge after breaking above the $3,500 region. However, the price has reached extremely overbought levels and still shows no clear signs of a correction. A break above $3,900 would open the path toward the $4,000 area. However, due to the overbought conditions, a pullback may occur before the next leg higher.

Silver Price Analysis – Bullish Momentum

The daily chart for spot silver shows that prices continue to surge higher after breaking out from the $44 region. Momentum has remained extremely strong since the breakout from $35, and the market is now approaching long-term resistance near $48.

A breakout above this level could drive prices toward the key $50 mark, which serves as a major threshold for the next bullish leg. However, silver is currently in overbought territory, suggesting that a short-term correction may occur before the next move higher. Any pullback is likely to be seen as a buying opportunity for traders.

US Dollar Index Analysis – Consolidation

The daily chart for the USD Index shows that the index has been consolidating above the 96.50 area. Despite this consolidation, gold and silver maintain strong momentum as safe-haven demand pushes prices higher.

A break above 98.60 in the USD Index would open the way toward the 100.50 area. However, as long as the index trades below 100.50, the overall trend remains bearish. A break below 96.50 would likely trigger a strong decline in the USD Index.