Gold rallies to record highs above $3,800 on US Dollar weakness and shutdown risk

• Gold rallies to fresh record highs above $3,800 as bullish momentum extends.
• A weaker USD and softer Treasury yields keep downside cushioned, while geopolitical tensions and US government shutdown risk add to safe-haven flows.
• Light US calendar on Monday with Pending Home Sales and remarks from St. Louis Fed’s Musalem and NY Fed’s Williams.

Gold (XAU/USD) shines bright at the start of the new week, climbing past $3,800 for the first time and reaching a fresh record high. At the time of writing, XAU/USD is trading near $3,825, up around 1.70% on the day, extending its record-breaking rally into a seventh straight week.

After spending much of last week consolidating just below the previous all-time high near $3,791, momentum returned on Friday following the release of the US Personal Consumption Expenditures (PCE) inflation report. While the data came in broadly as expected, inflation remains above the Federal Reserve’s (Fed) 2% target, keeping the focus on upcoming labor-market indicators for clues on the Fed’s next move.

All eyes now turn to Friday’s US Nonfarm Payrolls (NFP) report, with labor-market conditions increasingly seen as the main downside risk to the economy and central to the Fed’s monetary policy outlook. As traders brace for the jobs data, the broader backdrop remains supportive of Gold’s rally.

A broadly weaker US Dollar (USD) and subdued Treasury yields continue to cushion the downside for Gold, while persistent geopolitical tensions and renewed tariff concerns, as well as uncertainty over a potential United States (US) government shutdown, keep the safe-haven bid in play.

Market movers: US shutdown risk, Fed outlook and labour data in focus

• The US faces the risk of a government shutdown from Wednesday unless Congress agrees on new funding legislation. Republican leaders in the House have pushed a stopgap bill to extend funding through November 21, but Senate Democrats have refused to back it without policy concessions. President Trump is scheduled to meet with top Democratic and Republican leaders in Congress later on Monday in a last-ditch effort to reach a deal on extending government funding and averting a shutdown.
• According to the BHH Marketview report, “the threat of a US government shutdown on Wednesday could potentially lead to a more dovish Fed. If a shutdown is brief, the Fed will largely ignore it. However, a prolonged shutdown (more than two weeks) increases the downside risk to growth and raises the likelihood of a more accommodative Fed.”
• Fed Governor Hammack told CNBC on Monday that the central bank still needs to maintain a restrictive policy stance, noting that the labor market appears broadly in balance but that there is lingering inflationary pressure, particularly in the services sector. He also cautioned that it is “more difficult to see that tariffs will be a one-time impact.”
• The core PCE Price Index, the Fed's preferred gauge of underlying inflation, rose 0.2% MoM, matching forecasts and down from July’s originally reported 0.3%, which was revised lower to 0.2%. The headline PCE Price Index rose 0.3% on the month, matching expectations and up from 0.2% in July, while the annual rate ticked up to 2.7% in August from 2.6% a month earlier.
• Monday’s US calendar is relatively light, featuring Pending Home Sales data, along with remarks later in the day from St. Louis Fed President Alberto Musalem and New York Fed President John Williams.

Technical analysis:

XAU/USD has decisively broken above the previous resistance level near $3,800. The breakout occurred after a period of sideways consolidation, signaling renewed bullish momentum, with the price action firmly above both the 21 and 50-period Simple Moving Averages (SMAs) on the 4-hour chart.

Immediate support now lies at the former breakout zone around $3,800, followed by the next cushion near the 21-period SMA at $3,761 and the 50-period SMA at $3,726. A sustained hold above $3,800 would maintain the near-term bullish bias, with further upside targets eyed toward $3,850 and beyond.

The Relative Strength Index (RSI) is hovering near 73 on the 4-hour chart, suggesting strong buying interest, though it also signals overbought conditions that could trigger a short-term pullback. A dip back below $3,800 would hint at profit-taking but is likely to attract fresh buying interest near the breakout zone.