Gold Price Forecast: XAU/USD drifts higher above $3,950 on global uncertainty

• Gold price attracts some buyers to near $3,970 in Tuesday's early Asian session.
• Global uncertainty boosts demand for the safe-haven metal.
• Imminent US rate cuts underpin the Gold price, with two more Fed rate reductions expected this year.

Gold price (XAU/USD) extends its rally to around $3,970 during the early Asian session on Tuesday. The precious metal edges higher on political uncertainty across the globe and the expectation of a US interest rate cut. Gold prices broke the $3,000 psychological level for the first time in March and $3,900 on Monday. 

Economic and political uncertainty in the US, France and Japan boost the safe-haven flows, benefiting the Gold price. Sanae Takaichi's surprise victory in the Liberal Democratic Party (LDP) leadership election marks an important turning point for Japan's policy and market outlook and pushes back the likely timing of the Bank of Japan's (BoJ) next rate hike. 

In France, new Prime Minister Sebastien Lecornu and his government resigned on Monday, hours after taking office, deepening the country's political crisis. Meanwhile, the US government shutdown entered its sixth day, with the US President Donald Trump administration warning it was moving forward with plans to slash the federal workforce. 

"A slew of political and economic concerns around the world, such as the resignation of France's new prime minister, rising yields in Japan and an ongoing US government shutdown, is all contributing to gold's latest rally," said Edward Meir, an analyst at Marex.

Furthermore, the prospect of an interest rate cut by the US Federal Reserve (Fed) might contribute to the yellow metal's upside. Investors are currently pricing in nearly a 25 basis points (bps) reduction at the Fed meeting this month, with an additional 25 bps cut expected in the December policy meeting, according to the CME FedWatch tool. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal. 

Traders will keep an eye on the Fedspeak later on Tuesday. Fed's Raphael Bostic, Michelle Bowman, Stephen Miran and Neel Kashkari are scheduled to speak. Any hawkish remarks from Fed policymakers could lift the US Dollar (USD) and weigh on the USD-denominated commodity price in the near term.