• Gold outlook remains bullish, standing above the key $3,870 level.
• Risk flows due to the US government shutdown, weaker labor data, and the Russia-Ukraine crisis push gold up.
• Markets await the US ADP and ISM Manufacturing PMI for more impetus.

Gold prices are holding near the record high levels of $3,875 during the early European session, buoyed by safe-haven flows and a weakening dollar. The metal has already gained 47% year-to-date, including an 11% gain in September. US political gridlock and a weaker US labor market prompt investors to seek safety in bullion.

The US government has entered a shutdown after Congress failed to pass the funding bill, triggering furloughs of 750,000 federal employees and threatening a delay in the release of key NFP data. With official sources muted, the market participants are now looking at proxies. After JOLTS reported 7.22 million job openings in August, with the hiring rate falling to its lowest level since June 2024, the markets now turn to ADP employment and ISM PMI data. Susan Collins, President of the Boston Fed, said that the weaker labor market requires further rate reductions, but sustained inflation keeps the Fed cautious.

The US Dollar Index has lost around 1% since the release of the US Core PCE Index data, which softened the odds of persistent inflation. A weaker greenback increases gold’s appeal for foreign buyers. Meanwhile, Treasury yields remain volatile due to uncertainty around the timing and scale of rate cuts.

Geopolitical risk poses another tailwind, as Russia threatens Ukraine over missile deliveries, and rising diplomatic friction pushes investors to seek refuge in the haven of gold. Central banks’ accumulation has also accelerated the gold rally. The September ETF flows remain the largest in three years, reflecting institutional appetite for the precious metal.
 

Key Events Ahead for Gold

Two major data releases today include:

• ADP Employment Change
• ISM Manufacturing PMI

Weaker data could reinforce the Fed’s case for a quicker rate cut, potentially pushing gold to the $4,000 area.
 

Gold Technical Outlook: Bulls Aiming for $4,000
 

(Click on image to enlarge)

Gold 4-hour chart
 

The 4-hour chart displays a solid uptrend, with the price standing well above the moving averages. Yesterday’s highs of $3,870 have been broken, with eyes on $3,900 area as the next target. The ultimate target for buyers lies at $4,000.

On the other hand, the price could retest the $3,870 level, which acts as support ahead of the 20-period MA near $3,815 and then yesterday’s lows of $3,790. The probability of a profit-taking persists at these very high levels.

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