Gold prices climbed sharply during the North American session on Friday as escalating US–China trade tensions, the ongoing US government shutdown, and expectations of further Federal Reserve (Fed) easing spurred demand for safe-haven assets. At the time of writing, XAU/USD trades around $3,997, up 0.60% on the day and within striking distance of the psychological $4,000 level.
Haven demand rises as tariff threats and shutdown uncertainty intensify
Risk aversion dominated global markets after US President Donald Trump warned of a “massive increase” in tariffs on Chinese imports, following Beijing’s threat to impose export controls on rare earth materials. Trump added that there was “no reason” to meet with Chinese President Xi Jinping at the upcoming summit in South Korea, stoking fears of a renewed trade war between the world’s two largest economies.
The safe-haven bid for gold was further reinforced by the prolonged US government shutdown, now in its tenth day, with little progress toward a resolution. Meanwhile, data from the University of Michigan showed consumer sentiment holding steady in October, suggesting households are largely shrugging off the effects of the fiscal impasse.
Global political turmoil fuels flight to safety
Beyond the US–China tensions, rising political instability in Europe and Asia has added to the metal’s appeal. In France, reports that President Emmanuel Macron will not appoint a left-wing prime minister have intensified domestic unrest, with opposition leaders calling for new elections or even Macron’s resignation. In Japan, uncertainty deepened after Komeito party leader Tetsuo Saito declared an end to the party’s 26-year coalition with the ruling Liberal Democratic Party (LDP), throwing into doubt the prospects of Sanae Takaichi becoming Japan’s first female prime minister.
Dollar eases as yields tumble
Gold’s gains were supported by a softer US Dollar and lower Treasury yields. The US Dollar Index (DXY) fell 0.43% to 98.97, snapping a four-day winning streak, while the 10-year Treasury yield dropped nine basis points to 4.05%. Real yields also declined to 1.71%, further boosting non-yielding gold.
Comments from St. Louis Fed President Alberto Musalem added nuance to the policy outlook, as he noted that the Fed’s dual goals remain “in tension” with inflation still elevated and the labor market softening. He described financial conditions as “accommodative” and policy as “between modestly restrictive and neutral.”
Goldman Sachs lifts gold forecast, markets price in more easing
Goldman Sachs raised its 2026 gold price forecast to $4,900 from $4,300, citing strong central bank purchases and persistent inflows into gold-backed ETFs. Money markets now fully price in a 25-basis-point (bps) rate cut at the Fed’s October 29 meeting, with the probability standing at 94%, according to the Prime Market Terminal tool.
Technical outlook: bullish momentum tests key resistance
From a technical perspective, gold maintains a strong bullish bias, but the $4,000 barrier remains a critical test for buyers. A daily close above this level could pave the way for a run toward the all-time high at $4,059. Conversely, a pullback below the October 1 high at $3,895 would expose support at the 20-day Simple Moving Average (SMA) near $3,818.
Momentum indicators remain supportive, with the Relative Strength Index (RSI) holding above 70, confirming strong buying interest. While readings above 80 could suggest overextension, the prevailing uptrend continues to favor the bulls in the near term.
