Gold (XAUUSD) Price Forecast: Next Move Hinges on Shutdown Resolution and Fed Clarity

Gold Holds Above $4000 as Shutdown and Rate Cut Bets Drive Sentiment

Spot Gold (XAUUSD) ended last week nearly unchanged, with spot prices settling at $4001.28, down just $1.54 or -0.04%. Despite the muted close, the metal held firm above the $4000 level as traders grappled with Fed uncertainty, labor market weakness, and the ongoing U.S. government shutdown — now in its 38th day and counting.

Shutdown Stalemate Delays Key Data, Elevates Safe-Haven Demand

The absence of official government data has become a major theme, with the Bureau of Labor Statistics unable to release the non-farm payrolls report for a second consecutive month. This data vacuum has forced traders to rely on alternative indicators. Thursday’s Challenger report showed 153,074 job cuts in October — the highest since 2003 — while ADP posted a stronger-than-expected gain, creating mixed signals on labor strength.

With no clear visibility into core economic metrics, safe-haven flows into gold have gained traction. The prolonged shutdown has also raised concerns about broader economic stability, helping to limit downside for the metal.

Fed Signals Remain Mixed, but Markets See Higher Cut Odds

While the Fed delivered its second rate cut of the year in late October, Chair Jerome Powell warned that another move in December was “not a foregone conclusion.” Still, dovish commentary from other Fed officials — coupled with deteriorating labor indicators — has pushed rate cut odds higher. The CME FedWatch Tool now shows a 67% chance of a December cut, up from 60% earlier in the week.

That shift in expectations has helped support gold prices, even as Fed policymakers grow more cautious about making decisions without reliable economic inputs.

Dollar Pullback and Yield Decline Add Tailwinds for Gold

The U.S. dollar index eased into the weekly close, settling at 99.556 — down 0.16%. Meanwhile, Treasury yields slipped, with the benchmark 10-year falling to 4.093% for the week. These moves added fuel to gold’s bid, particularly as risk-off sentiment spilled over from equity markets, where tech-heavy indexes suffered their worst weekly loss in seven months.

Lower yields and a softer dollar tend to benefit non-yielding assets like gold, especially during periods of policy and economic uncertainty.

Physical Demand Weak in India, China Remains a Wild Card

Beyond the broader policy and rate environment, physical demand in key Asian markets remained lackluster. Indian gold buying continues to lag, with local dealers offering steep discounts due to price volatility. In China, traders are watching Beijing’s proposed changes to rare earth export rules — not directly tied to gold, but seen as a possible indicator of wider commodity policy shifts.

Gold Price Forecast: Bullish Tilt Holds, But Market Needs a Catalyst

Fundamentally, the gold market remains supported heading into the new week. Rate cut expectations are rising, Treasury yields are under pressure, and safe-haven demand shows no signs of fading. However, with official labor and inflation data still delayed, conviction is limited.

Traders will be watching for any signs of progress in the shutdown negotiations and fresh Fed commentary. Until a clearer catalyst emerges, gold may continue to base above $4000 — but a decisive breakout will likely require either confirmation of economic weakness or a policy shift from the Fed.

Technically, the main trend is up on the weekly chart despite the recent two-week setback. The short-term direction is being dictated by the retracement zone at $3846.50 to $3720.25, which has held for two-weeks although it hasn’t been actually tested.

The major support and trend indicator is the 52-week moving average at $3222.53. The market will continue to be in “buy the dip” mode as long as this holds as support.

On the upside, minor resistance is a 50% level at $4133.96. We could see selling on a drive into that price level, but overcoming it will put $4381.44 back on the radar.

More Information in our Economic Calendar.