Gold eases from record high as bulls pause for a breather; downside seems limited

Gold (XAU/USD) steadies following good two-way price swings on Friday and trades just below the $4,350 level during the first half of the European session. Nevertheless, the commodity remains on track to register strong gains for the ninth straight week and could extend the recent record-setting run amid a supportive fundamental backdrop. Concerns about economic risks stemming from renewed US-China trade tensions, geopolitical uncertainties, and a prolonged US government shutdown weigh on investors' sentiment, which continues to act as a tailwind for the safe-haven precious metal.

Apart from this, the growing acceptance that the US Federal Reserve (Fed) will cut interest rates two more times this year turns out to be another factor underpinning the non-yielding Gold. Meanwhile, dovish Fed expectations drag the US Dollar (USD) lower for the fourth straight day, to a one-and-a-half-week low, offering additional support to the commodity. The XAU/USD bulls, however, pause for a breather amid extremely overbought conditions. The supportive factors, however, suggest that any corrective pullback might still be seen as a buying opportunity and remain cushioned.

Daily Digest Market Movers: Gold bulls not ready to give up amid economic risks, Fed rate cut bets

• US-China trade tensions escalated in recent weeks after US President Donald Trump's threat to raise tariffs on Chinese goods to 100% in retaliation for the latter's enhanced restrictions on the export of rare earths. Moreover, both countries announced the tit-for-tat port fees on vessels linked to each other’s fleets, fueling concerns about an all-out trade war.
• Adding to this, concerns that a prolonged US government shutdown would affect the economic performance, assisted the safe-haven Gold to extend its recent record-setting run. The US Senate rejected a House Republicans’ short-term funding bill, aimed to end the government closure, for the tenth time on Thursday, underscoring a deadlock in Congress.
• On the geopolitical front, Russia launched hundreds of drones and dozens of missiles, as well as glide bombs on Thursday, hitting gas facilities in eastern Ukraine. Meanwhile, US President Donald Trump said that he will meet Russian President Vladimir Putin in Budapest, Hungary, to work toward ending the three-and-a-half-year war in Ukraine.
• US Federal Reserve Chair Jerome Powell struck a dovish tone earlier this week, saying that the labor market remained mired in its low-hiring, low-firing doldrums through September. Moreover, Fed Governor Christopher Waller noted on Thursday that inflation remains on its path to the central bank's 2% target and is not a barrier to interest rate cuts.
• Separately, Minneapolis Fed President Neel Kashkari said that the US job market was slowing down, and it was too soon to know the effect of tariffs on inflation. Nevertheless, traders now seem to have fully priced in a 25-basis-point rate cut at each of the October and December meetings, which continues exerting downward pressure on the US Dollar.

Gold corrective pullbacks might could be seen as buying opportunities

The daily Relative Strength Index (RSI) remains well above the 70 mark. This might prompt the XAU/USD bulls to take some profits off the table and trigger a sharp retracement slide. That said, any corrective fall below the $4,300 mark might continue to find some support near the Asian session low, around the $4,280-4,279 region. However, some follow-through selling could drag the Gold price towards the $4,235-$4,230 region en route to the overnight trough, around the $4,200 mark. The latter should act as a key pivotal point, which, if broken decisively, should pave the way for deeper losses.

On the flip side, momentum beyond the $4,379-4,380 region, or the Asian session high, could extend towards conquering the $4,400 round figure. A sustained strength beyond the latter will be seen as a fresh trigger for bullish traders and assist the Gold price to prolong its recent well-established uptrend witnessed over the past two months or so.