Gold record-setting run remains uninterrupted; bulls eye $3,900 ahead of US data

Gold (XAU/USD) continues to scale new record highs through the first half of the European session and has now moved well within striking distance of the $3,900 mark amid a supportive fundamental backdrop. Rising geopolitical tensions, along with the US government shutdown, weigh on investors' sentiment and underpin the safe-haven precious metal. Apart from this, the growing acceptance that the US Federal Reserve (Fed) will lower borrowing costs two more times by the end of this year turns out to be another factor driving flows towards the non-yielding yellow metal.

Meanwhile, the US Dollar (USD) selling bias remains unabated for the fourth consecutive day amid dovish Fed expectations and offers additional support to the Gold. The strong move up seems rather unaffected by extremely overbought conditions on the daily chart, suggesting that the path of least resistance for the XAU/USD pair remains to the upside. That said, it will still be prudent to wait for some near-term consolidation or a modest pullback before positioning for any further gains. Traders now look to the US ADP report and the US ISM Manufacturing PMI for a fresh impetus.

Daily Digest Market Movers: Gold prolongs uptrend amid Fed rate cut bets and safe-haven buying

• Gold has risen by an impressive 45% since the beginning of 2025 and recorded gains exceeding 11% in September as profound market uncertainty continues to drive investors globally to seek refuge in traditional safe-haven assets.
• A Republican spending bill failed to pass through the Senate on Tuesday, setting the stage for a partial government shutdown from midnight. A prolonged shutdown could have an adverse effect on economic performance.
• This could further encourage more easing from the US Federal Reserve, which, in turn, is seen driving flows towards the non-yielding yellow metal and contributing to the recent strong positive move to a fresh all-time high.
• According to the CME Group's FedWatch Tool, traders are currently pricing in a nearly 95% chance of an interest rate cut at the next FOMC meeting in October and an over 75% probability of another rate reduction in December.
• The expectations seem unaffected by hawkish comments from Dallas Fed President Lorie Logan, saying that anchored inflation expectations cannot be taken for granted and that he plans to exercise caution in further reductions.
• The US Bureau of Labor Statistics (BLS) reported in the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday that the number of job openings on the last business day of August stood at 7.22 million vs 7.2 million estimated.
• Russian officials said on Monday that a move to supply US Tomahawk cruise missiles to Ukraine, for strikes deep into its territory, could trigger a steep escalation. This keeps geopolitical risks in play and benefits the safe-haven bullion.

Gold bulls seem unaffected by extremely overbought conditions on short-term chart

From a technical perspective, the overnight goodish rebound from sub-$3,800 levels and the subsequent move up validate the near-term positive outlook for the Gold price. That said, the daily Relative Strength Index (RSI) remains well above the 70 mark and points to extremely overbought conditions. This, in turn, makes it prudent to wait for some near-term consolidation or a modest pullback before positioning for any further appreciating move.

Meanwhile, any corrective slide below the $3,835 immediate support is more likely to attract some buying near the $3,816 area, representing a short-term ascending trend-line. Some follow-through selling, leading to a subsequent breakdown and acceptance below the $3,800 mark, could pave the way for deeper losses and drag the Gold price to the next relevant support near the $3,758-3.757 region. The downfall could extend further towards the $3,735 support before the XAU/USD eventually drops to the $3,700 round figure.