**Gold (XAU/USD) Extends Rally to Fifth Day, Hits New Record Highs Amid Global Uncertainties**
Gold continues its impressive uptrend for the fifth consecutive day, scaling new record highs during the Asian session on Thursday. The persistent rise in gold prices reflects mounting global anxieties among investors, who remain increasingly concerned about economic risks associated with the US government shutdown, heightened US-China trade tensions, and escalating geopolitical conflicts. These factors continue to drive capital flows towards the traditional safe-haven asset—bullion.
Adding to gold’s appeal are dovish expectations for the US Federal Reserve (Fed). Market participants appear to have nearly fully priced in the possibility of two additional rate cuts by the Fed this year, bolstering demand for the non-yielding yellow metal. This outlook weighs on the US Dollar (USD), which has slipped to a more than one-week low, further strengthening the case for gold’s near-term appreciation.
Despite extremely overbought conditions visible on short-term charts, gold bulls remain undeterred. This resilience solidifies a positive near-term outlook for the commodity ahead of upcoming speeches from influential Federal Open Market Committee (FOMC) members.
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### Market Movers: Gold Supported by Flight to Safety, Dovish Fed, and Weaker USD
The partial US federal government shutdown has now stretched into its third week, with no resolution in sight. On Wednesday, a Republican-backed stopgap funding bill failed for the ninth time in the Senate, intensifying concerns about the economic fallout from a prolonged shutdown. A Treasury official estimated that the shutdown could cost the US economy $15 billion per week in lost output, revising an earlier statement from Treasury Secretary Scott Bessent.
Meanwhile, US-China trade tensions escalated further as both countries imposed reciprocal port fees this week. President Donald Trump also indicated he was considering ending the cooking oil trade with China in retaliation for China’s refusal to purchase American soybeans. Trump described the situation as an all-out trade war between the two nations.
On the other hand, Treasury Secretary Scott Bessent proposed a potential pause on import duties for Chinese goods beyond three months if China halts its planned export controls on rare-earth elements—offering a glimmer of hope for easing tensions.
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### Geopolitical Concerns and Fed Dovishness Support Gold
Geopolitically, US Defense Secretary Pete Hegseth warned Russia about possible consequences should the Ukraine conflict continue unabated. Adding to the tensions, President Trump mentioned the possibility of supplying Ukraine with longer-range Tomahawk cruise missiles.
In a dovish signal on Tuesday, Fed Chair Jerome Powell highlighted an ongoing sluggish labor market, characterized by low hiring and firing activity through September. This reaffirmed market expectations for two 25 basis point rate cuts in the Fed’s October and December meetings.
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### USD Under Pressure as Gold Extends Gains
The US Dollar has continued its downtrend for the third straight day, reaching its lowest level in over a week during Thursday’s Asian session. This decline supports gold’s record-breaking rally and suggests further upside potential for the yellow metal in the near term.
With no major economic releases on the immediate horizon, all eyes will be on speeches from key FOMC members for clues on upcoming rate adjustments. These communications are expected to play a crucial role in shaping USD demand and providing momentum to gold prices.
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### Technical Outlook: Gold Bulls Defy Overbought Signals
The XAU/USD pair has steadily trended higher along an upward-sloping trend line over the past month. Notably, gold’s recent sustained break and hold above the $4,200 psychological level has acted as a fresh catalyst for bullish momentum.
However, an extremely overbought daily Relative Strength Index (RSI) calls for caution before traders consider further long positions. Any corrective pullback could attract buyers near the $4,200 mark, potentially limiting downside pressure toward the $4,180-$4,175 support zone.
If gold breaks convincingly below this level, technical selling may intensify, driving prices toward the intermediate support area around $4,135 en route to the $4,100 level. The next critical support zone lies near $4,060-$4,055. A decisive break below this could signal that the XAU/USD pair has reached a near-term peak.
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**In summary, gold’s uptrend remains robust, supported by an intricate mix of economic uncertainties, dovish Fed expectations, and a weakening US dollar. Traders should monitor key support levels closely while staying attuned to upcoming FOMC remarks, which will likely influence the metals market direction in the short term.**
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