Gold continues its historic rally, breaking through $3,900
2025-10-07 02:05:05
Spot gold continued its historic rally during U.S. trading on Monday (October 6), breaking through $3,900 and setting new all-time highs. This trend is driven by the ongoing U.S. government shutdown, market expectations of a dovish Federal Reserve policy, and renewed political tensions in Europe, all of which have boosted demand for gold as a safe haven.
Gold prices hovered around $3,957 during the North American trading session. The precious metal gained about 1.80% on the day, pushing it further into a previously untouched price range and extending its upward trend for the eighth consecutive week.
The overall weakening of the yen, often considered a safe-haven asset, has also added momentum to gold's upward trajectory. This shift stems from investors reacting to shifts in Japan's political landscape. Overall, the outlook for gold remains bullish: ongoing geopolitical tensions, steady increases in gold holdings by central banks, and rising inflows into gold-backed exchange-traded funds (ETFs) continue to provide strong support for gold's remarkable rally. So far this year, gold prices have risen by approximately 50%.
Market drivers: The US government shutdown and political changes in France and Japan dominated the market
The US government shutdown continues: After weekend budget negotiations failed to reach an agreement, the US government shutdown entered its sixth day, leaving most federal departments closed. The White House warned of massive layoffs if the impasse persists, while the Senate is currently struggling to muster the 60 votes needed to advance a short-term funding bill, with no clear signs of a breakthrough in the near term.
French Prime Minister Resigns: French Prime Minister Sébastien Lecornu resigned on Monday, less than 24 hours after announcing his new cabinet and less than four weeks in office, after failing to secure parliamentary support for his government.
Japan's ruling party leadership change: On October 4, Sanae Takaichi was elected leader of Japan's ruling Liberal Democratic Party (LDP). If confirmed by parliament on October 15, she will become Japan's first female prime minister. Markets believe this leadership change could lead Japan toward a more accommodative monetary policy, increasing fiscal spending while reducing the urgency of interest rate hikes.
Demand for the US dollar and US Treasuries rebounded: Political tensions in France and Japan weighed on the euro and yen, boosting demand for the US dollar (USD) and US Treasuries. The US dollar index (DXY) rose to a near two-week high, limiting gold's gains to some extent.
Technical Analysis
(Source of spot gold 4-hour chart: Yihuitong)
Gold entered a consolidation phase after hitting a new high near $3,949. The price broke through the $3,900 mark, maintaining the bullish structure, and despite the overbought signal, buyers continued to take over at low levels (buy on dips).
Support level: The $3,900 range is the first support level, and is further reinforced by the 21-period simple moving average (SMA) of $3,885; the 50-period simple moving average of $3,829 is the deeper second support level.
Resistance/Target: A break above $3,949 could pave the way for a test of the psychological $4,000 level; a break below $3,900 could trigger a correction towards the aforementioned moving average support.
The relative strength index (RSI) is hovering around 75, just above the overbought zone (usually marked by 70), which suggests that gold may enter a period of consolidation before embarking on the next leg of its rally.
At 02:01 Beijing time, spot gold was quoted at US$3,959.06 per ounce, up 1.87%.
Gold prices hovered around $3,957 during the North American trading session. The precious metal gained about 1.80% on the day, pushing it further into a previously untouched price range and extending its upward trend for the eighth consecutive week.
The overall weakening of the yen, often considered a safe-haven asset, has also added momentum to gold's upward trajectory. This shift stems from investors reacting to shifts in Japan's political landscape. Overall, the outlook for gold remains bullish: ongoing geopolitical tensions, steady increases in gold holdings by central banks, and rising inflows into gold-backed exchange-traded funds (ETFs) continue to provide strong support for gold's remarkable rally. So far this year, gold prices have risen by approximately 50%.
Market drivers: The US government shutdown and political changes in France and Japan dominated the market
The US government shutdown continues: After weekend budget negotiations failed to reach an agreement, the US government shutdown entered its sixth day, leaving most federal departments closed. The White House warned of massive layoffs if the impasse persists, while the Senate is currently struggling to muster the 60 votes needed to advance a short-term funding bill, with no clear signs of a breakthrough in the near term.
French Prime Minister Resigns: French Prime Minister Sébastien Lecornu resigned on Monday, less than 24 hours after announcing his new cabinet and less than four weeks in office, after failing to secure parliamentary support for his government.
Japan's ruling party leadership change: On October 4, Sanae Takaichi was elected leader of Japan's ruling Liberal Democratic Party (LDP). If confirmed by parliament on October 15, she will become Japan's first female prime minister. Markets believe this leadership change could lead Japan toward a more accommodative monetary policy, increasing fiscal spending while reducing the urgency of interest rate hikes.
Demand for the US dollar and US Treasuries rebounded: Political tensions in France and Japan weighed on the euro and yen, boosting demand for the US dollar (USD) and US Treasuries. The US dollar index (DXY) rose to a near two-week high, limiting gold's gains to some extent.
Technical Analysis
(Source of spot gold 4-hour chart: Yihuitong)
Gold entered a consolidation phase after hitting a new high near $3,949. The price broke through the $3,900 mark, maintaining the bullish structure, and despite the overbought signal, buyers continued to take over at low levels (buy on dips).
Support level: The $3,900 range is the first support level, and is further reinforced by the 21-period simple moving average (SMA) of $3,885; the 50-period simple moving average of $3,829 is the deeper second support level.
Resistance/Target: A break above $3,949 could pave the way for a test of the psychological $4,000 level; a break below $3,900 could trigger a correction towards the aforementioned moving average support.
The relative strength index (RSI) is hovering around 75, just above the overbought zone (usually marked by 70), which suggests that gold may enter a period of consolidation before embarking on the next leg of its rally.
At 02:01 Beijing time, spot gold was quoted at US$3,959.06 per ounce, up 1.87%.
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