Senior metals strategist Peter Grant states that, amid the U.S. government shutdown and Supreme Court justices questioning the constitutionality of President Donald Trump's comprehensive tariff policies, "we are witnessing a resurgence in risk aversion demand." Additionally, Challenger Gray & Christmas reports that October corporate layoffs exceeded 150,000, marking the largest single-month reduction in over two decades. This development prompted the Federal Reserve to consider interest rate cuts at its December meeting, boosting gold prices. A decline in interest rates may reduce the opportunity cost of holding gold, thereby supporting the valuation of this non-yielding precious metal. Traders will closely monitor speeches from Federal Reserve officials on Friday, including Governors John Williams, Philip Jefferson, and Stephen Miran. Any hawkish commentary from the Fed policymakers could temporarily strengthen the U.S. dollar and weaken dollar-denominated commodities prices.

Due to a congressional deadlock, the longest government shutdown in U.S. history has persisted for 38 days, intensifying concerns over economic stability. In fact, the non-partisan Congressional Budget Office has projected that the shutdown could result in a 1.0% to 2.0% reduction in gross domestic product during the fourth quarter. Despite Democrats indicating readiness to block Republican-led efforts to force a vote on Friday—after the funding measure failed to pass 14 times—progress toward resolution remains elusive. Additionally, uncertainties surrounding the constitutionality of President Trump's comprehensive tariffs bolster gold prices as a safe-haven asset. The U.S. Supreme Court on Wednesday queried attorneys on the legality of tariffs imposed under the 1977 Trade Act Emergency Powers Law. Even conservative justices expressed skepticism about the scope of presidential authority in this matter. This uncertainty has added a risk premium to the market, underpinning gold prices during Asian trading hours. Revelio Labs labor analysis indicates that in October, the U.S. economy shed 9,100 jobs, with government employment decreasing by 22,200 positions. Furthermore, estimates from the Federal Reserve Bank of Chicago indicate that the unemployment rate slightly increased last month, signaling a deterioration in the labor market. According to the FedWatch tool by the Chicago Mercantile Exchange Group, traders currently price in a 67% probability of the Federal Reserve cutting interest rates again in December, up from 60% a week earlier. This has led to a decline in the U.S. dollar overnight, reaching its weekly low, thereby further supporting the rally in non-yielding gold. These supportive factors largely offset the influence of dollar dip-buying and bolster the further appreciation of the XAUUSD currency pair. Traders are now closely monitoring the release of the preliminary University of Michigan Consumer Sentiment Index to gauge short-term market momentum.

The 4H timeframe indicates that the price oscillates between 3928 and 4030, with the MACD's MACD line and signal line retreating to near the zero-axis. The MACD bearish momentum is gradually weakening, evidenced by higher lows. A decisive break above the triangle's upper boundary could potentially trigger a renewed bullish rally, while a break below the lower boundary might signal a downward trend. Resistance levels are identified at previous highs and around psychological key levels, specifically 4045 and 4100. The RSI stands at 54, suggesting a market sentiment predominantly observational in the short term. In the 1D timeframe, the MACD has formed a death cross, with the MACD line and signal line retreating to the zero-axis in certain distance, indicating an incomplete correction. The RSI is at 51, with investor sentiment remaining cautious. A sustained recovery above the EMA12 could potentially lead to an attack on the resistance level near 4133. It is recommended to go long at the lows.

Trading Direction: Buy

Entry Price: 4032

Target Price: 4400

Stop Loss: 3750

Support: 3900, 3800, 3600

Resistance: 4380, 4500, 5000