Gold (XAUUSD) Price Forecast: Rally Targets $3879.64 as Rate Cuts and Shutdown Fears Mount

Gold Price Breaks $3,800 as Rate Cut Bets, Shutdown Fears Fuel Rally

Gold pushed above $3,800 on Monday, breaching last week’s high at $3791.26 as a wave of safe-haven demand and dovish Fed expectations drove aggressive buying. The rally is gaining traction as traders position ahead of key U.S. macro events, with spot gold now targeting the next swing chart level at $3879.64 and the psychological $4000.00 mark.

At 10:39 GMT, XAU/USD is trading $3817.69, up $57.84 or +1.54%.

Gold Rally Fueled by Fed Rate Cut Bets and Shutdown Risk

Traders are pricing in a 90% probability of a 25-basis-point Fed cut in October, according to the CME FedWatch Tool, with another cut in play for December. Friday’s PCE report matched expectations and didn’t challenge the dovish narrative, reinforcing the outlook for looser policy into year-end.

Adding to the bullish case is the growing risk of a U.S. government shutdown. President Trump is set to meet Congressional leaders today, but with no funding deal in place, the government could shut down as early as Wednesday. That’s spurring flight-to-safety flows into gold, which typically benefits during periods of political dysfunction and economic uncertainty.

ETF Inflows, Official Demand Add to Bullish Momentum

Institutional demand remains strong. SPDR Gold Trust holdings rose 0.89% to 1,005.72 metric tons on Friday, while central bank demand continues to play a key role in supporting gold prices. Deutsche Bank noted that although jewelry demand and recycled supply are acting as drag factors, ETF flows and official purchases remain the primary tailwinds behind this year’s 45% gain in the metal.

Yields Fall Ahead of Key U.S. Jobs Data

U.S. Treasury yields fell across the curve Monday, with the 10-year at 4.141% and the 2-year at 3.627%, as markets brace for Friday’s nonfarm payrolls report. Forecasts call for a gain of 59,000 jobs and steady 4.3% unemployment. A weak print would reinforce the case for rate cuts, while a surprise to the upside could delay easing expectations.

The U.S. Dollar Index (DXY) dropped below its 50-day moving average at 98.023. A close below this level would open the door for a move toward 97.411, the 50% retracement of the July–September rally. The weaker dollar is further lifting gold’s appeal.

Gold Price Forecast: Bulls Eye $3879.64 and $4000.00

Gold’s technical structure remains bullish. A close above $3791.26 confirms continued upside momentum. The next resistance is the swing chart target at $3879.64, with $4000.00 in play if shutdown headlines or jobs data spark further demand.

The nearest support sits at $3717.52. A break below this swing bottom would shift the minor trend lower and disrupt short-term momentum, but buyers remain in control unless that level gives way.

Bottom line: As long as gold holds above $3717.52, the bias remains bullish. Rate cut pricing, ETF flows, and shutdown risk are the key drivers this week. Watch for a breakout above $3879.64 or a reversal back toward support ahead of Friday’s jobs report.

More Information in our Economic Calendar.