Gold (XAU/USD) surged to a new all-time high during the Asian session on Wednesday, supported by persistent safe-haven demand and growing expectations of further rate cuts from the US Federal Reserve (Fed). The metal’s upward momentum remains intact, with bulls now eyeing a potential move toward the $4,200 psychological level amid escalating geopolitical and economic risks.
Safe-haven demand drives gold higher
Investor anxiety remains elevated due to several factors, including the ongoing Russia-Ukraine conflict, renewed US-China trade tensions, and a prolonged US government shutdown. These concerns have sparked a broad shift toward safe-haven assets, boosting gold prices for the fourth consecutive session.
Markets are now pricing in a higher likelihood of two additional Fed rate cuts by year-end, which has weakened the US Dollar (USD) and further supported non-yielding assets such as gold. Despite overbought conditions on short-term charts, XAU/USD continues to attract strong buying interest.
Trade and geopolitical tensions underpin sentiment
US President Donald Trump intensified trade tensions on Tuesday, threatening to end trade with China in certain goods — including cooking oil — after Beijing halted purchases of US soybeans. China retaliated by imposing special port fees on US ships and tightening export restrictions on rare earth materials.
The escalation has fueled fears of a renewed trade war between the world’s two largest economies, enhancing gold’s appeal as a hedge against uncertainty. Adding to the risk-off tone, reports indicate that Washington is considering sending Tomahawk missiles to Ukraine to increase pressure on Russia, keeping geopolitical risks elevated.
US government shutdown and Fed outlook weigh on USD
The US government shutdown, now entering its third week, continues to weigh on the dollar as political deadlock delays key economic data releases. A Republican-backed stopgap funding bill once again failed to pass in the Senate on Tuesday, deepening concerns about the economic fallout.
Meanwhile, Fed Chair Jerome Powell stopped short of offering specific rate guidance on Tuesday but acknowledged persistent labor market weakness — remarks that reinforced dovish expectations. Other Fed officials have also hinted at further easing. According to the CME FedWatch Tool, markets have fully priced in a 25-basis-point rate cut in October and see a 90% chance of another reduction in December.
Technical outlook: Gold remains bullish but overbought
Gold’s recent surge has been supported by an ascending trend line, suggesting that the path of least resistance remains to the upside. However, the daily Relative Strength Index (RSI) signals overbought conditions, warranting caution against chasing prices higher.
Any corrective pullback toward the $4,100 area could offer a fresh buying opportunity, with initial support likely around the $4,060–$4,055 zone. A decisive break below this region may trigger technical selling, exposing the $4,000 psychological level — a key area that coincides with trend-line support and the 50-period Simple Moving Average (SMA) on the 4-hour chart. A clear breach below that zone would mark the first sign of potential bullish exhaustion and open the door for deeper losses.
