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01/10/25
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Gold Near All-Time Highs Amid U.S. Government Shutdown Fears
Gold continues to trade near its all-time highs above $3,870 amidst escalating concerns over a potential U.S. government shutdown. Market participants are closely monitoring developments as the expiration of federal funding at 04:00 GMT on Wednesday raises the risk of a prolonged impasse between Congress and the Biden administration. Historically, such shutdowns have led to temporary delays in key economic data releases, such as the upcoming U.S. employment report, which is pivotal for Federal Reserve monetary policy considerations.
In the current environment, market sentiment has become increasingly cautious, with investors seeking refuge in safe-haven assets like gold amid uncertainties surrounding fiscal negotiations. Meanwhile, the U.S. dollar has shown signs of consolidation on the downside, partly due to subdued labor market data. The latest figures indicate a modest increase in job openings but a slowdown in hiring, reflecting a hesitant labor market that could influence the Fed’s upcoming policy decisions.
Technical analyses suggest that gold is maintaining its bullish trajectory, with the four-hour RSI remaining within favorable territory. The potential for continued gains keeps the focus on a key resistance level around $3,870, which if broken convincingly on a daily close, could pave the way toward the $3,900 level and beyond. Conversely, short-term support levels sit near $3,806, with deeper retracements possibly testing the low of September at approximately $3,718.
The Federal Reserve’s monetary policy stance remains a significant driver in the background. With its dual mandate of price stability and full employment, the Fed balances rate adjustments against evolving economic signals. The potential for quantitative easing or tightening further influences the dollar’s trajectory and, by extension, gold’s price. Should the Fed adopt a more accommodative stance due to uncertainties, gold may find more room to extend its rally. Overall, markets are poised for volatility as political and economic uncertainties continue to unfold.
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