Gold (XAU/USD) is holding firm above the $3,850 level on Friday, showing signs of stabilization after a volatile session on Thursday that saw prices dip toward $3,838. The metal is supported by safe-haven demand amid ongoing political uncertainty in the United States and rising expectations of Federal Reserve rate cuts.
Shutdown Concerns Support Gold
With the U.S. government shutdown extending into its third day, investor sentiment remains cautious. The delay of key economic data, including the Nonfarm Payrolls (NFP) report, is fueling uncertainty around the Fed’s next move. In the meantime, traders are shifting focus to the ISM Services PMI, due later today, for near-term direction.
Fed Commentary Adds to Uncertainty
U.S. Treasury Secretary Scott Bessent warned on Thursday that a prolonged shutdown could hit economic growth and employment, potentially cutting $15 billion in GDP each week and pushing 43,000 people into joblessness if it lasts a month.
Chicago Fed President Austan Goolsbee said that in the absence of official labor data, the central bank would rely on alternative data sources to guide policy. Dallas Fed’s Lorie Logan maintained a hawkish tone, cautioning that rate cuts should be approached carefully given persistent inflation pressures.
Dollar Weakens Slightly
The U.S. Dollar Index (DXY), which tracks the greenback against a basket of major currencies, eased modestly to around 97.81, helping to support gold prices after rebounding from a one-week low.
Technical Outlook: Gold Consolidates Near Key Levels
Gold continues to attract dip-buying interest following Thursday’s pullback. The $3,860–$3,865 zone is acting as near-term resistance, with prices testing the 21-period Simple Moving Average (SMA) around $3,859 on the 4-hour chart.
- Immediate support lies at $3,838, followed by the deeper low at $3,820. A break below these levels may trigger a deeper correction.
- On the upside, a move above the $3,865 resistance could pave the way for a retest of the all-time high near $3,896.
The Relative Strength Index (RSI) has cooled from overbought levels and is now hovering above 55, indicating a period of consolidation with potential for further gains if bullish momentum returns.
Summary
Gold remains supported above $3,850, buoyed by political uncertainty, dovish Fed expectations, and a softer U.S. dollar. With the NFP report delayed, traders are eyeing the ISM Services PMI for clues on the economic outlook. While volatility may persist, the broader bias remains tilted to the upside as long as dip-buying interest continues to emerge.