Gold (XAU/USD) extended its rally for the second consecutive session on Monday, reaching a new all-time high around the $4,059–4,060 level during the Asian trading hours. The precious metal continues to attract strong safe-haven inflows amid persistent economic uncertainty linked to the prolonged US government shutdown and renewed US-China trade tensions.
Additionally, growing expectations for further interest rate cuts by the Federal Reserve (Fed) are keeping the US Dollar (USD) under pressure, further supporting the non-yielding metal.
Fed rate cut bets and softer USD underpin gold
Markets are now pricing in increased odds of two additional Fed rate cuts this year, with the CME FedWatch tool showing a 96% probability of a 25-basis-point reduction in October and an 87% chance of another in December.
These expectations have weakened the USD, creating a favorable backdrop for gold. Meanwhile, although former US President Donald Trump has softened his tone on proposed 100% tariffs on Chinese goods—saying that China’s economy “will be fine” and that the US seeks to “help China, not hurt it”—investors remain cautious as global economic tensions linger.
Global tensions and political risks drive safe-haven demand
The broader risk sentiment deteriorated late last week after Trump’s tariff threat and the introduction of new export controls on critical software, set to take effect on November 1. China accused the US of “double standards” and hinted at countermeasures if the tariffs are implemented, fueling uncertainty about a potential meeting between Trump and Chinese President Xi Jinping later this year.
Compounding the risk-off mood, the US government shutdown entered its third week with no progress in negotiations. Lawmakers remain gridlocked over funding, and the Senate is not expected to vote until Tuesday.
Meanwhile, Trump escalated geopolitical risks by warning that he may authorize long-range Tomahawk missile deliveries to Ukraine if Russia does not agree to end the war—drawing a sharp response from Moscow. The heightened geopolitical uncertainty has reinforced gold’s appeal as a safe-haven asset.
Technical outlook: overbought but bullish trend intact
From a technical standpoint, gold’s rebound from a three-week-old ascending trend line support on Friday reinforces the bullish bias for XAU/USD. However, short-term charts indicate overbought conditions, suggesting that a brief consolidation or modest pullback could precede further gains.
On the downside, any corrective movement below the $4,020–4,018 range is likely to attract fresh buying interest near the $4,000 psychological mark. This level is expected to serve as a solid support zone aligned with the prevailing trend line around $3,965–3,964. A decisive break below this area, however, could trigger technical selling and open the door to a deeper decline toward the $3,900 region.
