Gold (XAU/USD) is extending gains on Friday, trading near $3,875 in the US session, up 0.50% on the day after recovering from an intraday low of $3,838. The metal continues to attract safe-haven demand as the US Dollar eases, with the protracted government shutdown and expectations of Fed rate cuts fueling upside momentum.
US shutdown and Fed expectations support Gold
The US government shutdown has entered its third day, leaving markets without the September Nonfarm Payrolls report and potentially delaying other key releases, including CPI due October 15. According to a White House memo, the economy risks losing $15 billion in GDP for each week the government remains closed, with a month-long impasse potentially adding 43,000 job losses.
Fed officials acknowledge the growing data gap. Chicago Fed President Austan Goolsbee noted the central bank will rely on alternative indicators if official statistics remain unavailable, citing a steady unemployment rate around 4.3%. Dallas Fed President Lorie Logan cautioned that recent rate cuts should be considered “insurance,” warning against moving too quickly with additional easing while inflation remains above target.
ISM Services PMI drops to neutral, highlighting softer activity
The ISM Services PMI fell to 50.0 in September from 52.0 in August, undershooting expectations of 51.7 and marking its weakest level this year. The New Orders Index dropped sharply to 50.4 from 56.0, while the Employment Index remained in contraction at 47.2 for a fourth straight month.
By comparison, the S&P Global Services PMI slipped only marginally to 54.2 from 54.5, with the Composite PMI easing to 53.9 from 54.6. Both measures remain in expansionary territory, suggesting the broader private sector retains moderate momentum despite signs of cooling.
DXY remains pressured as political risks weigh
The US Dollar Index (DXY) is trading around 97.81, losing steam after Thursday’s rebound from a one-week low. Ongoing fiscal gridlock, coupled with softer economic signals, has kept the Greenback under pressure, adding to Gold’s safe-haven appeal.
Technical outlook: dip-buyers emerge near key support
XAU/USD is consolidating after Thursday’s swings, with strong dip-buying interest seen around $3,838. The 21-period Simple Moving Average on the 4-hour chart at $3,859 is acting as immediate resistance, with the $3,860–$3,865 zone capping further gains for now.
A sustained break above this area could open the door for a retest of the all-time high near $3,896. On the downside, support is located at $3,838, followed by $3,820. The Relative Strength Index (RSI) is stabilizing around 55, suggesting the market is pausing before either resuming its uptrend or entering a consolidation phase.
