Gold (XAU/USD) traded near the key $4,000 psychological level during Asian hours on Friday, attracting renewed buying interest after a brief pullback in the previous session. Persistent concerns over the economic fallout from the prolonged US government shutdown and uncertainty surrounding the legality of President Donald Trump’s tariff measures have dampened risk sentiment, steering investors toward safe-haven assets such as gold.
The shift toward risk aversion is evident in weaker equity market performance, while softer US labor data further supports expectations of additional monetary easing from the Federal Reserve (Fed). A private-sector survey on Thursday indicated job losses in October, keeping the door open for further rate cuts.
According to the CME FedWatch Tool, markets now price a 67% probability of another Fed rate reduction in December, up from 60% a week earlier. The resulting decline in the US Dollar (USD) has also lent strength to the non-yielding metal, though intermittent dollar buying could limit upside momentum.
Meanwhile, the political gridlock in Washington continues to weigh heavily on sentiment. The US government shutdown entered its 38th day on Friday, with the Congressional Budget Office estimating the standoff could shave up to 2% off fourth-quarter GDP. No resolution appears imminent as Democrats signal plans to block GOP efforts to push a vote on the stalled funding bill, which has failed 14 times to advance.
Adding to market uncertainty, the US Supreme Court this week questioned the scope of presidential authority under the 1977 emergency powers law used to justify recent tariff actions. Even conservative justices expressed skepticism, raising doubts about the long-term validity of these measures. This legal ambiguity has reinforced demand for gold as a hedge against political and economic instability.
From a technical perspective, gold’s recent breakout above a descending trendline from last Friday, along with a sustained move above the 100- and 200-hour Simple Moving Averages (SMAs), suggests a bullish bias in the short term. However, neutral oscillators on the daily and 4-hour charts, combined with the metal’s struggle to establish firm footing above $4,000, warrant a cautious outlook. Resistance is expected near the $4,020–$4,030 zone, followed by $4,045–$4,050 and the $4,100 handle.
On the downside, immediate support lies around $3,975–$3,965, followed by the weekly low near $3,929–$3,928. A decisive break below $3,900 could expose the October swing low at $3,886 and potentially trigger a deeper correction from recent record highs.
Overall, while safe-haven flows and dovish Fed expectations remain key tailwinds, gold’s ability to sustain momentum above $4,000 will be critical to confirming the next bullish leg.
