Gold (XAU/USD) continues to trade higher above the key $4,000 level in early European hours on Friday. Although the metal trades slightly below Thursday night’s peak, buyers remain active as mixed market signals keep safe-haven demand intact.
Worries about economic damage from the prolonged US government shutdown and uncertainty around the legality of former President Donald Trump’s tariffs are pushing investors toward safer assets like gold. This sentiment is visible in weaker equity markets, helping gold stay supported.
At the same time, data from a private survey on Thursday showed the US economy lost jobs in October. This raises hopes of further interest rate cuts by the Federal Reserve, adding to gold’s appeal since it does not offer yield. However, some fresh buying in the US Dollar is limiting gold’s upside. Still, the broader market backdrop remains favorable for bulls, and gold looks set for modest weekly gains.
Key Market Highlights
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The US government shutdown has now entered its 38th day, fueling fears of an economic slowdown. The Congressional Budget Office estimates the shutdown could shave 1–2% off Q4 GDP.
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Political gridlock continues as Democrats prepare to block GOP efforts to force a funding vote. Meanwhile, legal uncertainties around Trump’s past tariff authority are boosting safe-haven flows.
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US Supreme Court hearings this week questioned the president’s power to impose emergency tariffs, adding market uncertainty and supporting gold.
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Labor data showed 9,100 private-sector job losses in October, with government payrolls down by 22,200. The Chicago Fed also sees unemployment ticking higher, hinting at a weakening labor market.
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According to CME’s FedWatch Tool, traders now expect a 67% chance of a December Fed rate cut — up from 60% last week — pressuring the USD and supporting gold.
Overall, despite some USD strength, gold remains well-supported by safe-haven demand and rising expectations of further Fed rate cuts. Traders will now watch the upcoming University of Michigan Consumer Sentiment data for near-term direction.
