Gold Price Forecast: XAU/USD runs past $4,000 amid continued demand for safety

XAU/USD Current price: $4,057.50

• United States government shutdown faces critical deadline on October 15.
• Federal Open Market Committee September minutes coming up next.
• XAU/USD extends rally into unexplored territory, bullish despite extremely overbought.

Spot Gold surpassed the $4,050 threshold on Wednesday, establishing yet another record high. The bright metal kept rallying on the back of global political woes. The United States (US) government shutdown entered its eighth day, without signs of ending anytime soon.

Investors are looking at October 15 as a critical deadline, as it would be payday for active-duty military service members. In prior shutdowns, Congress passed separate bills to keep it funded, and it could also be the case this time, should Republicans and Democrats fail to agree on a funding bill. Meanwhile, US President Donald Trump reiterated his threats of massive federal worker layoffs, blaming rival Democrats.

Meanwhile, market players gear up for the upcoming Federal Open Market Committee (FOMC) Minutes. The document should shed some light on policymakers' considerations when they decided to cut the benchmark interest rate by 25 basis points (bps) at their meeting in September. Additionally, it could offer some clues on what’s next for monetary policy.

XAU/USD short-term technical outlook

The XAU/USD pair keeps rallying in the American afternoon, currently trading at around $4,055. The extreme overbought conditions persist in the daily chart, but also the strong bullish momentum. Technical indicators accelerated their advances, with the Momentum indicator heading north almost vertically and the Relative Strength Index (RSI) indicator advancing beyond 87. At the same time, Gold is far above all bullish moving averages, with the closest one being the 20 Simple Moving Average (SMA) at around $3,785.

XAU/USD is also bullish in the near term. The 4-hour chart shows that technical indicators aim higher in overbought levels, while the bright metal also runs far above all its moving averages. The 20 SMA gains additional traction but stands roughly $100 below the current level, reflecting solid buying interest.

Support levels: 4,040.40 4,021.90 4,015.10

Resistance levels: 4,070.00 4,085.00 4,100.00