Gold Price Forecast: XAU/USD rallies to $3,820 amid a potential US government shutdown

• Gold reaches fresh all-time highs beyond $3,800 amid concerns of a US government shutdown.

• Lower US Treasury yields and a tumbling US Dollar are buoying precious metals on Monday

• Technically, the RSI divergence suggests that the bullish trend is losing momentum.

Gold is trading above $3,800, after hitting fresh all-time highs at $3,819 on Monday's European session, with precious metals thriving and the US Dollar tumbling as investors brace for a potential shutdown of the US government on Wednesday.

Trump is expected to meet bipartisan congressional leaders later on the day, but the odds of an agreement look highly unlikely. The US President considered the demands of the Democratic leaders “totally unreasonable”, and there is growing speculation that he might use the shutdown to push his agenda of a downsized public sector.

Technical indicators are showing a bearish divergence

The fundamental scenario remains supportive, but technical indicators are showing a different picture. Gold’s trend remains bullish, but the 4-hour RSI shows a bearish divergence, suggesting that the trend might be losing steam after having rallied more than 5% in the last 10 days and More than 15% in the last five weeks.

To the upside, above the mentioned intra-day high of $3,818, bulls may be challenged by the 127.2% Fibonacci extension of the mid-September bull run, around $3,830, and the trendline resistance in the vicinity of $3,860.

A pullback from current levels, on the other hand, might be capped at the previous resistance area of $3,790, where the metal was held on September 23 and 26. Below here, the confluence of trendline support with the September 28 low, at $3,755, and the September 24 low, near $3,715, would come into focus.