Gold: Futures Stuck at Key Resistance but Shutdown Adds Short-Term Uncertainty
LONDON (October 1) The federal government has finally declared a shutdown for the first time in six years after a deadlocked Congress failed to pass a funding measure to keep the government running, and now no one inside the Capitol knows what will happen next.
A letter issued by the director of the Congressional Budget Office prior to the shutdown has given more details over the potential financial implications like 750,000 federal employees could be furloughed each day, with a total daily cost of around $400m while the members of Congress will still be paid as their pay is required by the American constitution, the letter adds.
Moreover, the effects of a government shutdown on business activity are uncertain, and their magnitude would depend on the duration of a shutdown and on decisions made by the Administration, the letter adds.
Undoubtedly, every government shutdown differs, but functions that are critical to protect lives and property are typically deemed essential and stay open. Previous shutdowns canceled immigration hearings and delayed federal lending to home buyers and small businesses, among other impacts.
I find that government shutdowns in the US are becoming more common, with Donald Trump’s first presidential term seeing three such instances. This includes the longest shutdown in American history, lasting 35 days.
Before Trump, Bill Clinton held the previous record, with a 21-day shutdown in 1995 towards the end of his first term as president. Republicans had won control of both the House and the Senate halfway through Clinton’s first term, and wanted to pass a budget that, among other things, limited spending for Medicare.
Ronald Regan, a republican president, oversaw the most shutdowns during his presidency, with eight recorded across his two terms in the 1980s. However, all of them were relatively short – the longest funding gap lasted a mere three days.
On analysis of the previous government shutdowns, I find that this shutdown is likely to last for a short period, most probably for a few days, as the current global economic scenario is much different, as the US itself is going through the self-denting trade policies of US President Donald Trump since he resumed office on Jan. 20, 2025.
Undoubtedly, his trade tariff policies have pushed the global economy into extreme indecisiveness, and now this shutdown will blur the global economic scenario that could keep the gold futures under check, as the gold has already breached the selling zone yesterday, and Friday seems to be a tough day for the gold futures as the bulls are facing a stiff resistance at $3,922.77.
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After reviewing the movements of the gold futures in a 1-hour Chart, since Sept. 24, 2025, when the gold futures started to move upward after testing a support at $3751, it looks ready to take a sharp reversal due to extensive bearish pressure at the immediate resistance at $3,922 on Friday morning, despite a shutdown in the United States.
I conclude that if the gold futures continue to trade below this pivotal point, big bears could load fresh shorts with a stop loss at $3950 for a target at $3725 before this weekly closing.
Investing.com
