Gold is once again set to break the $4,000 barrier as uncertainty over United States government shutdown drags on. The government’s recent funding crisis, which forced the delayed release of key economic data, has spooked investors. As the political impasse between Republicans and Democrats drags on, gold’s appeal as a safe-haven asset grows.
Unfortunately, the U.S. government’s recent shutdown has thrown a monkey wrench into the usual schedule for releasing important economic data. Virtually all of the scheduled data for the remainder of the week will be missed. Analysts expect this lack of information to further increase gold’s attractiveness. Gold prices surged to an all-time high of $3,895.29 on Wednesday, led by strong demand as economic uncertainty continues to cause widespread panic.
Currently, XAU/USD is trading around $3,870. Technically, the analysis is straight bullish, with gold still making higher highs. As seen in the 20-day Simple Moving Average (SMA), major support is present around $3,828, representing a strong floor for prices. Additionally, moving averages under this threshold still have positive slants, further supporting a bullish outlook.
The new ADP Employment Change report came out today with some very sobering job growth numbers for September, well below forecasts. This confluence of U.S. data has the investors jittery, especially with yet-to-be approved negotiations unfolding in Congress. After initially doing so, the Senate later rejected a Democratic-sponsored short term government funding resolution. This decision underscored the growing divide between the two political parties.
The three large cap stock indexes are on fire and trading up today. In contrast, gold finds itself strong and stable. Republicans and Democrats have conflicting priorities and mutually exclusive goals in seeking funding fixes. This irony has been producing an ever more hazardous economic environment.
Support levels for XAU/USD are found at 3,853.25, 3,828.00 and 3,807.05 in that order. On the upside, resistance levels are 3,895.00, 3,910.00, and 3,930.00. The current momentum indicator has resumed its advance above the critical 100 line, suggesting ample room for further increases in gold prices.