Gold holds near record levels as Fed policy outlook and Washington risks drive demand

Gold (XAUUSD) is holding close to record highs, supported by strong safe-haven demand. A declining Dollar, dovish Fed outlook, and political tensions in Washington are adding to its appeal. Markets are bracing for the possibility of a U.S. government shutdown, which could delay critical labor market data and complicate Fed decisions. Recent labor figures also indicate weakness, reinforcing the case for more lenient policy. Falling rates increase gold’s appeal, with both institutional and retail investors expanding positions to support the uptrend.

Gold steadies near record highs on Fed bets and political risks

Gold is holding near record highs, backed by safe-haven demand, a weaker Dollar, and expectations of Fed rate cuts. Markets brace for the risk of a U.S. government shutdown. A shutdown would push back the monthly labor market report, a critical indicator for guiding Federal Reserve policy decisions. Without timely data, the Fed could face greater uncertainty in setting interest rates. Moreover, investors still remember the 35-day shutdown in late 2018 and early 2019, which delayed key reports and weakened confidence in U.S. stability.

Meanwhile, markets have fully priced in a 25-basis-point rate cut this month, with CME’s FedWatch tool confirming the outlook. However, the risk of a government shutdown could intensify doubts over U.S. fiscal and monetary credibility. This uncertainty may pressure the Dollar and enhance gold’s appeal as a safe haven. Recent labor market data support this view, as the JOLTS report showed that job openings rose by just 19,000 in August, while hiring levels fell. A weaker jobs outlook pressures the Fed to stay dovish, while lower rates strengthen gold by cutting the cost of holding non-yielding assets.

At the same time, the Dollar is losing ground as government stress and softer data reduce its appeal. Gold benefits directly from this weakness, with demand holding steady. In addition, major institutions are expanding their gold holdings, while individual buyers step in to shield themselves from political and economic risks. Furthermore, upcoming data releases such as the ISM Manufacturing PMI, along with remarks from Fed officials, will guide the market outlook. These factors suggest that gold will remain supported, with safe-haven demand sustaining its strength.

Gold breakout above key resistance confirms strong and sustained uptrend

The gold chart below shows a powerful uptrend with clear and decisive price action. The long-term support line, marked in black, has guided the broader trend since mid-2024. This level has remained intact through multiple corrections, confirming strong structural support and highlighting gold’s underlying strength.

In 2025, a short-term support line formed in red, marking a level that consistently held. Each pullback was contained, and the structure remained intact. After consolidating between $3,300 and $3,450, gold staged a breakout. The horizontal resistance near $3,440 restricted the price for months, but once broken, momentum accelerated sharply. This breakout signaled renewed strength in the uptrend and reinforced confidence in gold’s bullish outlook.

Gold is now trading above $3,800, firmly positioned over both short-term and long-term support levels. This confirms the breakout as the beginning of a stronger uptrend rather than a false move. Pullbacks continue to establish higher lows, while rallies extend to fresh highs. The alignment of rising support lines with repeated breakouts highlights sustained upward pressure. These technical signals, combined with steady safe-haven demand, present a strong case for continued gains.

Gold outlook: Macro drivers and technical strength support continued upside

Gold holds near record highs as macroeconomic drivers and technical signals align. Political risks, a weaker Dollar, and expectations for Fed easing continue to boost its role as the leading safe-haven asset. Repeated breakouts and firm support levels highlight the strength of the uptrend. Meanwhile, rising demand across global markets continues to add momentum to the rally. Overall, these factors strengthen confidence in gold’s outlook and highlight the potential for further upside.

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