Gold News: Gold Rally Defies Dollar Strength, Fueled by Shutdown and Fed Uncertainty

Gold Price Hits Record $4049.70 as Traders Target $4100 on Safe-Haven Surge

Gold (XAU/USD) ripped through the $4000 barrier on Wednesday, tagging a new all-time high at $4049.70 before easing slightly. The rally continues to be fueled by strong safe-haven demand tied to a stalled U.S. government, falling yields, and political disarray in Europe and Japan. With no resistance levels overhead, bulls are now looking toward $4100.00 as the next upside magnet.

At 11:42 GMT, XAU/USD is trading $4035.81, up $51.48 or +1.29%.

Government Shutdown, Delayed Data Keep Fed Uncertainty Elevated

U.S. Treasury yields slipped again as the government shutdown dragged into a second week. The 10-year yield dropped to 4.104%, while the 30-year fell 3.1 basis points to 4.695%. The shutdown has already delayed last Friday’s jobs report and threatens to push back more key data releases, limiting market visibility ahead of the next Fed meeting.

Despite mixed Fed commentary, futures markets are pricing in a 92% chance of a 25 bp cut at the October FOMC and see about 110 bps of total easing by year-end 2026. Traders will be focused on the release of the FOMC minutes and upcoming speeches from Fed Governor Stephen Miran and Chair Jerome Powell for confirmation.

While Kansas City Fed President Jeff Schmid pushed back on the idea of further rate cuts, saying current conditions don’t justify more easing, markets continue to lean dovish — especially with growth uncertainty rising and the fiscal backdrop deteriorating.

Dollar Finds Support on Political Risk, But Gold Shrugs It Off

The U.S. dollar caught a bid on Wednesday, with the dollar index climbing to 98.56 as political headlines weighed on the euro and yen. The euro dropped to $1.1662 following France’s prime minister’s resignation, which threatens to delay budget approval and complicate deficit control.

In Japan, the yen weakened to 152.46 — its lowest since February — as markets digested the leadership win by Sanae Takaichi, who’s expected to pursue aggressive fiscal spending. Rate hike odds from the Bank of Japan have dropped sharply, with markets now pricing just a 26% chance of a hike later this month.

Even with the dollar strengthening, gold has held firm — a sign of strong underlying demand and resilience in the current bid.

Gold Price Forecast: Bulls in Control, but Watch for Heat Exhaustion

The gold market remains extremely overbought, now trading well above the 50-day moving average at $3565.88. With no resistance above and strong momentum behind the move, bulls have a clean path toward $4100.00 and potentially higher.

That said, the market is getting hot. If traders start locking in profits, a short-term correction could develop — but that wouldn’t necessarily change the broader uptrend. The nearest minor support at $3819.42 would only come into play on a reversal, not as an active level right now.

The current bias remains bullish. Stay long — but stay tactical.

More Information in our Economic Calendar.