Gold (XAU/USD) erased its intraday losses on Friday, recovering from a dip toward the $4,280 region to trade just below the $4,350 mark—near its all-time high touched earlier in the session. The precious metal is poised to log its ninth consecutive weekly gain as investors continue to flock to safe-haven assets amid rising geopolitical risks, persistent US-China trade tensions, and an extended US government shutdown.
Safe-haven flows dominate as global risks mount
Growing economic and political uncertainty continues to bolster demand for gold. Escalating trade frictions between the world’s two largest economies have reignited market caution after US President Donald Trump threatened to raise tariffs on Chinese goods to 100% in response to Beijing’s new restrictions on rare earth exports. Both countries also imposed reciprocal port fees earlier this week, further fueling fears of a potential trade war escalation.
Meanwhile, the ongoing US government shutdown—now in its 16th day—has deepened investor anxiety over the domestic economy. The Senate rejected the House Republicans’ short-term funding proposal for the tenth time on Thursday, signaling a prolonged political stalemate that could begin to impact economic growth.
On the geopolitical front, rising tensions in Eastern Europe have also driven safe-haven demand. Russia launched large-scale strikes across eastern Ukraine on Thursday, while US President Donald Trump announced plans to meet Russian President Vladimir Putin in Budapest to discuss potential pathways toward ending the three-and-a-half-year war.
Fed rate cut bets weigh on the dollar, lift gold
Expectations of further monetary easing by the Federal Reserve (Fed) continue to underpin gold’s bullish outlook. Fed Chair Jerome Powell reiterated earlier this week that the US labor market remains sluggish, supporting the case for continued policy accommodation. Fed Governor Christopher Waller added that inflation is moving closer to the 2% target and no longer poses an obstacle to rate cuts. Similarly, Minneapolis Fed President Neel Kashkari emphasized the recent slowdown in hiring, noting that it is too early to assess the inflationary impact of new tariffs.
Markets are now pricing in nearly full odds of two additional 25-basis-point rate cuts—one in October and another in December—according to the CME FedWatch Tool. The resulting decline in US Treasury yields and broad US Dollar (USD) weakness have further strengthened gold’s appeal as a non-yielding asset.
Technical outlook: overbought but still bullish
Gold’s daily Relative Strength Index (RSI) remains well above 70, suggesting overbought conditions in the short term. This could prompt some profit-taking, with immediate support seen near $4,300 and the intraday low around $4,280. A sustained move below this zone could open the door toward $4,235–$4,230, with the $4,200 area acting as a key pivot level.
On the upside, a break above $4,380—the Asian session high—could propel prices toward the $4,400 psychological barrier. A decisive move beyond this level would likely reinforce bullish momentum, allowing gold to extend its multi-week uptrend toward fresh record highs in the sessions ahead.
