Gold eyes $4,000 as Fed rate-cut bets and political tensions drive safe-haven demand

Gold (XAUUSD) continues to set new records as fears over economic and political conditions intensify. Expectations for two upcoming Fed rate cuts are driving demand for the metal. At the same time, the ongoing U.S. government shutdown and threats of mass layoffs are fueling investor anxiety. Shifting global policies and heightened geopolitical risks are strengthening gold’s safe-haven demand. Despite a stronger U.S. Dollar and delayed economic data, gold continues to show strength, supported by both fundamentals and technical momentum.

Gold gains strength on Fed rate-cut bets and US political chaos

Gold is trading at record levels as markets assign a 95% probability to a Federal Reserve rate cut in October and an 83% chance of another in December. These dovish expectations have been a key driver of gold’s ongoing surge. Simultaneously, mounting political instability in the U.S. is intensifying market anxiety. The prolonged government shutdown is fueling uncertainty among investors. Meanwhile, President Trump’s threat of widespread layoffs is intensifying fears surrounding the economy and labor market. This combination is reinforcing gold’s position as a preferred defensive asset.

Moreover, global policy shifts are also influencing the market. In Japan, Sanae Takaichi’s recent win as leader of the ruling LDP signals a continuation of dovish policy by the Bank of Japan. Markets have pushed back expectations for rate hikes, weakening the Yen. Although the U.S. Dollar has climbed, gold’s stability signals persistent buying interest and trend strength.

Meanwhile, geopolitical tensions remain high. Ukraine has reported a fresh barrage of Russian missile and drone attacks, with over 500 drones and 50 missiles launched in a single night. Trump has pressed Israel and Hamas to resume peace negotiations, cautioning that delays may trigger “massive bloodshed.” These risks continue to support safe-haven flows into gold. Additionally, the delayed release of key U.S. economic data due to the shutdown has left markets without clear direction. In this environment, attention turns to upcoming Fed speeches for guidance, but the overall momentum in gold remains firmly upward.

Gold approaches $4.000 as ascending channel signals ongoing uptrend

The gold chart below shows a powerful and sustained uptrend within a well-defined ascending channel. This channel has acted as a guiding structure, consistently containing price action within its bounds. Gold has respected both support and resistance levels, confirming the reliability of the pattern through a steady sequence of higher highs and higher lows.

Between late 2024 and early 2025, gold maintained a steady climb, frequently rebounding off the channel’s midline with shallow retracements. In recent weeks, momentum has strengthened as the metal broke firmly above the $3,500 midline. This breakout triggered a rapid climb toward the $4,000 psychological barrier. This surge has carried price into the channel’s upper resistance zone, with gold now hovering just below this critical level.

Consequently, a sustained breakout above $4,000 could lead to additional upside and mark the beginning of a sharper rally. The $3,500 level now acts as key support within the current structure, with the lower boundary near $3,100 providing deeper long-term protection. Pullbacks have remained shallow and short-lived, indicating persistent buying interest just below the resistance level. With no reversal pattern in sight, the technical outlook remains bullish, suggesting a continuation of the upward trend.

Gold outlook: Uptrend remains intact as Fed and political risks intensify

Gold has reached record levels, driven by a combination of dovish Fed expectations, political instability, and rising global tensions. Its resilience near these highs reflects strong safe-haven demand and a solid technical foundation. If rate-cut expectations hold and global tensions remain elevated, gold’s upward momentum should stay intact. A decisive break above $4,000 could trigger the next leg of this powerful uptrend.

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