Gold extended Monday’s strong rally into Tuesday as dovish expectations for the Federal Reserve continued to support bullion. At writing, XAU/USD hovered near three-week highs around $1,940, up roughly 0.7% for the day.
That said, gold has struggled to attract aggressive follow-through buying. Optimism that the prolonged U.S. government shutdown is finally close to resolution is damping some of the metal’s safe-haven appeal. While a funding deal would remove an immediate source of market anxiety, investors recognize it won’t address the broader fiscal pressures the country faces.
Once the government fully reopens, delayed economic releases are likely to resume—potentially delivering fresh evidence of a slowdown and strengthening the case for additional Fed easing. Against this backdrop, and with geopolitical tensions still simmering, gold’s short-term technical outlook remains constructive, and dips are expected to draw buyer interest.
Key drivers this week include:
- U.S. Shutdown Deal: On Monday, the Senate voted 60–40 to fund the government through January 30, following a rare bipartisan agreement. The measure now moves to the House for approval before heading to the president’s desk. While it averts an immediate crisis, another partial shutdown looms if lawmakers fail to agree on longer-term spending, and new funding will likely be covered by additional borrowing at a time when U.S. debt has topped $38 trillion.
- Mixed China Trade Signals: Beijing announced it would broaden market access for U.S. firms and suspend “special port fees” on American-operated vessels for a year. At the same time, reports surfaced that China is drafting export controls on rare-earth magnets—permitting civilian sales but restricting shipments to U.S. defense-linked companies.
- Other Trade Developments: President Trump said talks are “pretty close” to producing a tariff-cutting deal with India, and discussions with Switzerland are advancing. Bloomberg also reported that Washington and Bern are near finalizing an agreement to slash U.S. tariffs on Swiss goods from 39% to about 15%.
Looking ahead, the economic calendar is light on Tuesday, though the ADP Employment Change four-week average will draw some attention later in the day. Trading volumes are likely to remain muted with the Veterans Day holiday in the U.S., and the focus will shift to several Fed speakers due on Wednesday.
Technical analysis: XAU/USD consolidates below $4,150 after bullish breakout
On the 4-hour chart, XAU/USD finally cleared its two-week range between $3,900 and $4,050 on Monday, confirming a bullish breakout. The next hurdle sits around $4,150—if bulls can push and close above that level, momentum could carry gold toward $4,200 and even set the stage for a run at the all-time high near $4,381.
On the downside, immediate support comes in at $4,100, with a stronger floor at $4,050 (the old range ceiling). The 100-period simple moving average, currently hugging $4,046, further reinforces that zone.
Meanwhile, the RSI has climbed into overbought territory at about 72, suggesting caution for buyers. A short pullback or a period of sideways consolidation can’t be ruled out before gold embarks on its next leg higher.
