By Linh Tran, Market Analyst at XS.com
Gold began the new week on a steady upward trajectory, reaching a new all-time high around $4,035/oz, marking eight consecutive weeks of gains since early August. This development reflects a clear shift in global capital behavior, as investors increasingly favor defensive safe-haven assets amid the temporary U.S. government shutdown and the delay of key economic data releases.
The absence of timely reports such as Nonfarm Payrolls (NFP) and the unemployment rate has left markets without crucial insights into the state of the U.S. economy. This lack of visibility has prompted investors to return to risk-averse positioning, while expectations that the Federal Reserve (Fed) will maintain a dovish stance have grown stronger. Recent indicators — including a slowdown in the ISM manufacturing index and a 32,000-job decline in private-sector employment according to ADP — highlight a cooling labor market, easing cost-push inflation pressures and expanding the Fed’s policy flexibility.
This environment has facilitated a decline in U.S. Treasury yields and a notable weakening of the U.S. dollar, both of which historically move inversely to gold prices. According to Federal Reserve Economic Data (FRED), the 10-year real yield has fallen below 1.6%, reflecting market expectations that the Fed may begin a rate-cut cycle by late Q4 2025. As real yields decline, the opportunity cost of holding non-yielding assets like gold diminishes, thereby enhancing gold’s relative attractiveness within global portfolios.
On a broader level, U.S. fiscal conditions remain a key driver of safe-haven demand. The government shutdown — triggered by political gridlock in Congress over budget approvals — not only delays economic data but also raises concerns over the country’s creditworthiness. Moody’s has warned that a prolonged shutdown could threaten the U.S. credit rating, echoing the 2011 episode when gold first broke above $1,900/oz. Global investors appear to be reacting similarly now, rotating out of risk assets and into gold, government bonds, and Bitcoin as systemic hedges.
Meanwhile, geopolitical tensions in the Middle East, particularly between Israel and Hamas, continue to escalate despite ongoing ceasefire negotiations. This keeps global geopolitical risk elevated, especially as major economies like China and Europe remain in fragile recovery phases. In this environment, gold continues to fulfill its traditional safe-haven role, bolstered further by central banks across Asia and the Middle East that are actively increasing their gold reserves as part of their long-term diversification strategies.
Although gold is approaching a technically overbought zone, ETF inflows remain robust for the second consecutive week, supporting the ongoing rally. According to the World Gold Council (WGC), global gold ETF holdings have risen by over 20 tonnes since early October, primarily driven by funds in North America and Asia. This suggests that institutional investors remain strategically defensive, with little evidence of profit-taking so far.
In the short term, however, a technical correction cannot be ruled out if the upcoming FOMC minutes or Fed Chair Jerome Powell’s speech signal a less dovish tone than expected.
Overall, the gold outlook for Q4 2025 remains decisively bullish. The convergence of U.S. fiscal risk, potential Fed easing, and persistent geopolitical uncertainty continues to underpin demand for safe-haven assets. Should the Fed formally signal a forthcoming rate-cut cycle in the coming months, gold could extend its rally toward the $4,100–$4,150/oz range, marking the start of a new upward phase into year-end.