Gold (XAU/USD) regained some ground early Wednesday during the European session, trading near $4,150 per ounce. The yellow metal is finding renewed support amid growing uncertainty surrounding the ongoing US government shutdown and rising concerns over global sovereign debt sustainability.
Market expectations for another Federal Reserve (Fed) rate cut in the upcoming October policy meeting have also underpinned gold prices. A potential quarter-point rate reduction would lower the opportunity cost of holding the non-yielding metal, further boosting its appeal.
However, improving sentiment over US-China trade relations could limit gold’s upside. Both sides are reportedly working toward a deal before the November 1 tariff deadline, which could reduce safe-haven demand in the short term.
Looking ahead, traders will turn their attention to the US September Consumer Price Index (CPI) report due Friday, following delays caused by the government shutdown. Both headline and core CPI are expected to rise 3.1% year-on-year. A stronger-than-expected inflation print could lift the US Dollar (USD) and weigh on gold prices.
Daily digest: gold gains as US Dollar weakens
The US government shutdown entered its fourth week, with the Senate failing once again to pass a House-approved funding bill in a 50–43 vote that split largely along party lines.
Meanwhile, President Donald Trump softened his recent stance on China after previously threatening a 100% tariff, acknowledging that such measures are “unsustainable.” Trump expressed optimism about securing a “good deal” with President Xi Jinping, though he admitted the meeting “may not happen.”
US Treasury Secretary Scott Bessent is also expected to meet Chinese officials to discuss easing trade tensions ahead of the next round of talks. According to the CME FedWatch Tool, markets are currently pricing in a 99% probability of a Fed rate cut next week, followed by another in December.
Gold technical analysis
Gold maintains a positive long-term outlook, with prices holding above the 100-day Exponential Moving Average (EMA). Despite this constructive structure, short-term momentum appears neutral, as reflected by the 14-day Relative Strength Index (RSI) hovering near the midline.
On the upside, initial resistance lies at $4,140, the October 15 high. A break above this level could expose $4,330 (October 16 high) and then $4,370–$4,380, marking the all-time high zone and the upper Bollinger Band boundary.
On the downside, key support is seen at the psychological $4,000 level, followed by $3,947 (October 10 low) and $3,838 (October 3 low).
Overall, gold remains technically supported, with a bullish bias intact as long as prices stay above the $4,000 threshold.
