Select Language

Gold nears $4,000 as shutdown fears, interest rate cuts ignite rally

Breaking news

Gold nears $4,000 as shutdown fears, interest rate cuts ignite rally

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2025.10.08 04:26
Gold nears $4,000 as shutdown fears, interest rate cuts ignite rally

update 2025.10.08 04:26

  • Gold surges due to prolonged US government shutdown and dovish Fed outlook boosting safe haven appeal.
  • Fed officials stay cautious -- Miran sees slower growth, while Kashkari warns tariff inflation risks remain unclear.
  • Goldman Sachs lifts 2026 Gold target to $4,900, citing strong ETF inflows and continued PBoC reserve accumulation.

Gold price rallied during the North American session and reached a record high of $3,991, before settling closer to $3,982 for a 0.60% gain. Uncertainty about the US government shutdown and expectations of lower interest rates the Federal Reserve (Fed) keep the yellow metal bid.

Bullion hits fresh record highs on US fiscal gridlock, geopolitical uncertainty and central bank demand

The New York Fed revealed the Survey of Consumer Expectations (SCE) showed that inflation expectations ticked higher, while the labor market continued to deteriorate.

Aside from this, Fed officials crossed the wires. The Minneapolis Fed's Neel Kashkari was moderately hawkish, saying that it is too soon to know if inflation will be sticky from tariffs. Earlier, Fed Governor Stephen Miran noted that growth in the first half of this year was slower than expected and that policy should be forward looking, given the lags of policy impact.

Alongside the reasons mentioned above, Bullion is also underpinned by the Russia-Ukraine war and political uncertainty in France and Japan.

Goldman Sachs revised their 2026 forecast for Gold prices from $4,300 to $4,900, citing strong flows into Gold ETFs and central bank demand. The People's Bank of China (PBoC) added Bullion to its reserves in September for the eleventh straight month.

Daily digest market movers: Gold edges up as US yields tumble

  • Bullion prices rise in tandem with the US Dollar as the DXY, which tracks the buck's value against a basket of six currencies, gains 0.46% to 98.57.
  • US Treasury yields retreat as the 10-year Treasury note is down three basis points at 4.125%. US real yields -- which correlate inversely to Gold prices --, are also down nearly three-and-a-half bps at 1.785%.
  • The Minneapolis Fed's Kashkari revealed that data is showing some stagflation signals and that he is bullish on labor. He's not convinced that a few rate cuts will translate to lower mortgage rates, but if they do drastically, he would expect the economy would a burst of high inflation.
  • The New York Fed SCE showed that the median inflation expectations for one year increased from 3.2% to 3.4% and for a five-year period from 2.9% to 3%. For a three-year horizon, it remained steady at 3%.
  • The same survey revealed that earnings growth expectations fell by 0.1% to 2.4%.
  • Money markets indicate that the Fed will cut interest rates by 25 basis points (bps) at the upcoming October 29 meeting. The odds stand at 94%, according to the Prime Market Terminal interest rate probability tool.

Technical outlook: Gold price surges as bulls target $4,000

Gold price has extended its uptrend and seems poised to test the $4,000 mark in the near term. So far, the record high is $3,991. The Relative Strength Index (RSI) remains in overbought territory, but its slope remains tilted to the upside.

XAU/USD's next key resistance would be the all-time high of $3,991, followed by $4,000. On the flip side, Gold's first support would be $3,900, followed by the $3,850 level, ahead of the October 2 low of $3,819 and the $3,800 mark.

Gold FAQs

Gold has played a key role in human's history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn't rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country's solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.


Date

Created

 : 2025.10.08

Update

Last updated

 : 2025.10.08

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

RBNZ expected to cut interest rates to 2.75% in October

The Reserve Bank of New Zealand (RBNZ) is widely expected to cut the Official Cash Rate (OCR) by another 25 basis points (bps) from 3% to 2.75% after concluding its October monetary policy meeting on Wednesday.
New
update2025.10.08 05:15

Gold nears $4,000 as shutdown fears, interest rate cuts ignite rally

Gold price rallied during the North American session and reached a record high of $3,991, before settling closer to $3,982 for a 0.60% gain. Uncertainty about the US government shutdown and expectations of lower interest rates the Federal Reserve (Fed) keep the yellow metal bid.
New
update2025.10.08 04:25

AUD/USD Price Forecast: Aussie holds firm above key support despite Greenback's strength

The Australian Dollar (AUD) edges lower against the US Dollar (USD) on Tuesday as renewed Greenback strength keeps the pair on the defensive.
New
update2025.10.08 03:30

FX Today: The FOMC Minutes takes centre stage

The US Dollar (USD) extended its weekly recovery, advancing to new two-week highs in a context domintaed by the risk-off sentiment. Meanwhile, there was no news regarding negotiations to end the ongoing US government shutdown.
New
update2025.10.08 03:22

Donald Trump: We will have tariffs with Canada, and Canadians will love us

US President Donald Trump addressed multiple topics on Tuesday, weaving his way through them in his typical proclamatory fashion, speaking to reporters from the White House.
New
update2025.10.08 02:44

Dow Jones Industrial Average knocks lower as shutdown fears grow

The Dow Jones Industrial Average (DJIA) knocked lower on Tuesday, following the broader market into the low side. Investors are reconsidering their disregard for the US government shutdown that has dragged into its second week and shows no signs of resolution.
New
update2025.10.08 02:11

EUR/JPY hits a new record high as Japanese Yen continues to weaken

EUR/JPY gains 0.30% for the day on Tuesday, trading near a new record high of 176.60.
New
update2025.10.08 01:53

USD/JPY extends rally to seven-month high as Yen weakens on leadership transition

The Japanese Yen (JPY) remains under downside pressure, extending its slide against the US Dollar (USD) for a second straight day on Tuesday.
New
update2025.10.08 01:51

GBP/USD retreats as Greenback strengthens amid US government shutdown

GBP/USD drops during the North American session after failing to clear the 50-day Simple Moving Average (SMA) of 1.3464 as the Greenback registers gains amid the ongoing US government shutdown.
New
update2025.10.08 01:10

Fed's Kashkari grows bullish on labor

Federal Reserve (Fed) Bank of Minneapolis President Neel Kashkari struck a more reserved tone than some of his Fed counterparts on Tuesday, cautioning that it's still too soon to be able to tell if tariff-led inflation will be "sticky" or not.
New
update2025.10.08 00:58

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel