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Gold price (XAU/USD) holds positive ground near $4,010 after retreating from a fresh record high of $4,059 in the previous session during the early Asian session on Thursday. Broader geopolitical and economic uncertainty firmed traders' demand for the safe-haven asset. 

Growing concerns over the US economy and political stability provide some support to the yellow metal. The Senate on Wednesday again rejected dueling Republican and Democratic funding proposals to end the government shutdown. The shutdown has entered its ninth day with no hint of progress toward a resolution. US President Donald Trump’s administration warned on Tuesday of no guaranteed back pay for federal workers during a government shutdown.

Furthermore, the US Federal Reserve (Fed) lowered its benchmark interest rate at its September policy meeting, the first time since late 2024, and signaled that two more reductions could be in the cards later this year. The Fed is widely expected to cut rates by 25 basis points (bps) at its October meeting, and traders are currently pricing in nearly a 78% possibility of an additional cut in December, according to the CME FedWatch tool.

The prospect of an interest rate cut could underpin the precious metal in the near term. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal. 

On the other hand, easing geopolitical risks in the Middle East might cap the upside for the yellow metal. US President Donald Trump late Wednesday announced that Israel and Hamas have both signed off on the first phase of peace plan, per the BBC. All the hostages were also supposed to be freed within 72 hours of an agreement being reached, though Hamas on Saturday signaled this may be unrealistic.

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