Gold Price Forecast: XAU/USD remains near all-time high around $3,900 as Fed dovish bets swell

• Gold price trades firmly amid firm Fed dovish bets.
• The US government shutdown and weakening job market have prompted the Fed's interest rate expectations.
• Headcounts in the US private sector labor force were reduced by 32K in September.

Gold price (XAU/USD) trades 0.35% higher to near $3,880 during the European trading session on Thursday, close to its all-time high of $3,895 posted on Wednesday. The yellow metal demonstrates strength as the United States (US) government shutdown has intensified speculation for more interest rate cuts by the Federal Reserve (Fed) this year.

According to the CME FedWatch tool, traders seem sure that the Fed will cut interest rates by 25 basis points (bps) to 3.75%-4.00% in the policy meeting later this month and see an 87% chance of lowering them again in the December meeting.

Theoretically, lower interest rates by the Fed bode well for non-yielding assets, such as Gold.

On Tuesday midnight, the White House announced the partial government closure as the stopgap bill failed to get approved in the House of Senate. According to a White House memo, the US Growth Domestic Product (GDP) could decline by $15 billion each week on Washington's closure.

US President Donald Trump has held Democrats responsible for the shutdown and has attacked their priorities by freezing $26 billion in funding towards Democratic-leaning states, Reuters reported.

Another reason behind swelling Fed dovish bets is the weakening United States (US) job market conditions. The US ADP Employment Change report for September showed on Wednesday that the private labour force was reduced by 32K headcounts, which was expected to have seen a fresh addition of 50K workers.

Gold technical analysis

Gold price aims to reclaim the all-time high of $3,895 posted on Wednesday. The near-term trend of the Gold price remains bullish as the 20-day Exponential Moving Average (EMA) slopes higher around $3,717.20. The upward-sloping trendline from the August 22 low around $3,321.50 will act as key support for the Gold price.

The 14-day Relative Strength Index (RSI) oscillates inside the 60.00-80.00 range, suggesting a strong bullish momentum.

On the upside, the Gold price could extend its upside towards $4,000. Looking down, the 20-day EMA will act as key support.

Gold daily chart