Gold prices remain below all-time highs as the US government shutdown continues and the ISM services PMI weakens.
2025-10-04 02:17:36
On Friday (October 3), spot gold prices broke through $3,850 and hovered around $3,879, a daily increase of over 0.59%. Gold prices have rebounded from yesterday's low of $3,838, finding new buying support.
The overall outlook for gold remains bullish, and pullbacks are likely to attract bargain-hunting buying interest. This support comes from safe-haven demand as the US government shutdown enters its third day. Furthermore, growing expectations for a Federal Reserve interest rate cut later this month are providing additional support for gold prices.
Looking ahead, with the September non-farm payrolls (NFP) report delayed due to political gridlock in Washington, market attention has turned to the US ISM Services Purchasing Managers' Index (PMI), which highlighted signs of cooling economic momentum. The September ISM Services PMI fell to 50.0, below expectations of 51.7 and down from 52.0 in August.
Market drivers: The US government shutdown affects economic growth prospects and the Fed's policy path
The ISM report showed that the new orders index plummeted from 56.0 to 50.4; the employment index remained in the contraction range of 47.2. Although it rebounded slightly from the previous value of 46.5, it has shown weak employment for the fourth consecutive month.
In contrast, the S&P Global Services PMI fell only slightly from 54.5 to 54.2 in September, and the composite PMI also fell slightly from 54.6 to 53.9. Both still showed a moderate expansion trend.
Dallas Federal Reserve Bank President Lorie Logan struck a hawkish tone on Thursday, saying the recent rate cut should be viewed as an “insurance measure” and warning that the Fed must be “very cautious” in cutting rates given that inflation remains above target.
The outlook for the Federal Reserve has become even more uncertain as the government shutdown has disrupted key data releases. Friday's non-farm payroll report (NFP) is not expected to be released as scheduled, and the September Consumer Price Index (CPI) originally scheduled for October 15 may also be delayed, leaving policymakers with limited guidance ahead of the Federal Open Market Committee (FOMC) meeting on October 28-29.
The US dollar index (DXY) weakened slightly after rebounding from a one-week low on Thursday, trading around 97.76 during the session and remained under pressure.
Technical analysis: Gold stabilizes near the 21-day moving average, with continued buying interest on dips
(Source of spot gold 4-hour chart: Yihuitong)
Gold has stabilized after Thursday's wild swings, with bargain hunting emerging during the pullback. The $3,860-3,865 range, which previously formed resistance, has now turned into support, with the price currently above the 21-period simple moving average (SMA) on the 4-hour chart, which is located around $3,864.
Initial support is around $3,838, followed by Thursday’s low of around $3,820. If gold prices fall below these levels, it may trigger deeper pullback pressure, but buying interest on dips is still very obvious.
From the upside perspective, a decisive breakthrough through the $3,860-3,865 range would pave the way for gold to retest its all-time high near $3,896.
The relative strength index (RSI) has also stabilized after retreating from overbought territory and is currently hovering above the neutral level of around 61. This suggests that the market is in a consolidation phase after the recent rally and could either usher in a new round of gains or enter a period of consolidation.
The overall outlook for gold remains bullish, and pullbacks are likely to attract bargain-hunting buying interest. This support comes from safe-haven demand as the US government shutdown enters its third day. Furthermore, growing expectations for a Federal Reserve interest rate cut later this month are providing additional support for gold prices.
Looking ahead, with the September non-farm payrolls (NFP) report delayed due to political gridlock in Washington, market attention has turned to the US ISM Services Purchasing Managers' Index (PMI), which highlighted signs of cooling economic momentum. The September ISM Services PMI fell to 50.0, below expectations of 51.7 and down from 52.0 in August.
Market drivers: The US government shutdown affects economic growth prospects and the Fed's policy path
The ISM report showed that the new orders index plummeted from 56.0 to 50.4; the employment index remained in the contraction range of 47.2. Although it rebounded slightly from the previous value of 46.5, it has shown weak employment for the fourth consecutive month.
In contrast, the S&P Global Services PMI fell only slightly from 54.5 to 54.2 in September, and the composite PMI also fell slightly from 54.6 to 53.9. Both still showed a moderate expansion trend.
Dallas Federal Reserve Bank President Lorie Logan struck a hawkish tone on Thursday, saying the recent rate cut should be viewed as an “insurance measure” and warning that the Fed must be “very cautious” in cutting rates given that inflation remains above target.
The outlook for the Federal Reserve has become even more uncertain as the government shutdown has disrupted key data releases. Friday's non-farm payroll report (NFP) is not expected to be released as scheduled, and the September Consumer Price Index (CPI) originally scheduled for October 15 may also be delayed, leaving policymakers with limited guidance ahead of the Federal Open Market Committee (FOMC) meeting on October 28-29.
The US dollar index (DXY) weakened slightly after rebounding from a one-week low on Thursday, trading around 97.76 during the session and remained under pressure.
Technical analysis: Gold stabilizes near the 21-day moving average, with continued buying interest on dips
(Source of spot gold 4-hour chart: Yihuitong)
Gold has stabilized after Thursday's wild swings, with bargain hunting emerging during the pullback. The $3,860-3,865 range, which previously formed resistance, has now turned into support, with the price currently above the 21-period simple moving average (SMA) on the 4-hour chart, which is located around $3,864.
Initial support is around $3,838, followed by Thursday’s low of around $3,820. If gold prices fall below these levels, it may trigger deeper pullback pressure, but buying interest on dips is still very obvious.
From the upside perspective, a decisive breakthrough through the $3,860-3,865 range would pave the way for gold to retest its all-time high near $3,896.
The relative strength index (RSI) has also stabilized after retreating from overbought territory and is currently hovering above the neutral level of around 61. This suggests that the market is in a consolidation phase after the recent rally and could either usher in a new round of gains or enter a period of consolidation.
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