Gold (XAU/USD) extended its upward momentum during the Asian session on Monday, advancing beyond the key $4,000 psychological level. The move came after US President Donald Trump hinted that his administration could restrict access to advanced artificial intelligence (AI) technology for China, its primary strategic rival.
The remarks revived geopolitical tensions and bolstered demand for the safe-haven metal. Meanwhile, ongoing concerns about the potential economic fallout from the prolonged US government shutdown added further support to gold prices.
Fed’s hawkish tone limits upside potential
Despite renewed safe-haven demand, gold’s rally remains somewhat capped as the US Dollar (USD) holds firm near its highest level since early August. The greenback continues to draw support from the Federal Reserve’s (Fed) relatively hawkish stance following its recent 25-basis-point rate cut the second this year.
Fed Chair Jerome Powell signaled that additional easing was not guaranteed, while several FOMC officials echoed similar views, tempering market expectations for further cuts. The stronger USD, combined with a generally upbeat risk tone in equity markets, could limit gold’s near-term upside momentum.
Political and economic developments support demand
President Trump’s comments regarding Nvidia’s advanced Blackwell AI chip stating it “would not be available to other people” offset the recent optimism surrounding a potential US-China trade thaw. This shift in tone, alongside the continued government shutdown now stretching into its 33rd day, has reinforced investor caution.
Trump has urged Republican lawmakers to consider scrapping the filibuster rule to expedite a funding resolution, though party leaders have resisted. Market participants remain wary of the economic implications of an extended government closure, further underpinning gold’s safe-haven appeal.
Key data and Fed speeches in focus
Traders are now turning their attention to upcoming US data releases, particularly the ISM Manufacturing PMI, and scheduled remarks from several FOMC members later in the day. These events could provide short-term direction for the USD and, by extension, the gold market.
Technical outlook: resistance capped near $4,050
Gold showed resilience below the 100-hour Simple Moving Average (SMA) during Asian trading, with momentum indicators on hourly and daily charts turning positive again. A sustained break above the $4,045–4,050 resistance zone could pave the way for further gains toward $4,075 and potentially the $4,100 mark.
On the downside, immediate support is seen around $3,963–3,962, followed by $3,917–3,916 and the $3,900 handle. A clear drop below $3,886—the three-week low recorded last Tuesday could expose the metal to deeper declines toward $3,850–3,845, and eventually the $3,800 and $3,765 3,760 support regions.
