Quick overview

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The bullion metal is retesting its all-time peak and is expected to close the week in positive territory for the ninth consecutive week. Investors’ appetite for riskier assets is being tempered by ongoing geopolitical uncertainty, concerns over US-China trade tensions, and a prolonged US government shutdown.

The recent surge in this non-yielding yellow metal can be largely attributed to these factors, along with expectations of a dovish Federal Reserve (Fed).

The daily Relative Strength Index (RSI) remains significantly above 70, which could result in a sharp retracement as bulls in XAU/USD take some profits.

However, any decline below $4,300 may still find support in the $4,280–$4,279 range, close to the Asian session low. If prices approach the overnight low around $4,200, gold may experience additional selling pressure, potentially dropping to the $4,235–$4,230 range. This latter level is crucial; if it is broken decisively, it could lead to more significant losses.

Traders have fully priced in two additional rate cuts by the US central bank in October and December, which further supports gold and keeps the US dollar (USD) under downward pressure for the fourth consecutive day.

At the same time, extremely overbought conditions for gold are being balanced by a fundamentally supportive backdrop. The emergence of dip-buyers on Friday bolsters the argument for further gains, suggesting that the path of least resistance for the XAU/USD pair is upward.

Trade tensions between the US and China have escalated in recent weeks following US President Donald Trump’s threat to impose 100% tariffs on Chinese goods in retaliation for tightened export restrictions on rare earths. Concerns about a full-scale trade war intensified when both nations introduced tit-for-tat port fees on ships linked to each other’s fleets.

Additionally, fears that a prolonged US government shutdown could negatively impact the economy have helped propel gold to record high prices. A congressional impasse was evident on Thursday when the US Senate rejected a short-term funding bill from House Republicans aimed at ending the government shutdown for the tenth time.