Gold Price Forecast: XAU/USD rallies further to near $4,050, ignores upbeat US Dollar

• Gold price refreshes all-time high near $4,050 amid French political crisis.
• US President Trump warns of eliminating government programs and lay-offs amid shutdown.
• Investors await FOMC minutes for fresh cues on the monetary policy outlook.

Gold price (XAU/USD) extends its rally to near $4,050.00 during the European trading session on Wednesday. The precious metal continues to move higher as deepening political crisis in France and the United States (US) government shutdown have increased the demand of safe-haven assets, such as Gold.

French political crisis prompted after Prime Minister Sebastien Lecornu announced a sudden resignation after appointing new cabinet.

Meanwhile, US President Donald Trump threatened on Tuesday that the White House would cut spending programs as the government enters its second week of shutdown. Trump also stated that he will provide details about lay-offs in federal agencies in next four or five days.

Weakness in the Euro (EUR) due to French political crisis has increased the safe-haven demand of the US Dollar (USD) too. During the European session, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, jumps to near 99.00, the highest level seen in two months.

Technically, higher US Dollar makes the Gold price an expensive bet for investors.

Another reason behind strength in the Gold price is firm expectations that the Federal Reserve (Fed) will cut interest rates two times more this year. According to the CME FedWatch tool, traders see an 82% chance that the Fed will cut interest rates by 25 basis points (bps) in each of its two policy meetings remaining this year.

For more cues on the monetary policy outlook, investors await Federal Open Market Committee (FOMC) minutes of the September policy meeting, which will be published at 18:00 GMT.

Gold technical analysis

Gold price remains in uncharted territory from over a month. The near-term trend of the Gold price remains bullish as the 20-day Exponential Moving Average (EMA) slopes higher around $3,800. 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) stays above 60.00 from a long period, suggesting a strong bullish momentum.

On the upside, the Gold price could extend its upside towards $4,100. Looking down, the October 2 high around $3,900 would act as key support.

Gold daily chart