Gold consolidates gains below $4,050 as traders await Fed Meeting Minutes

NEW YORK (October 8) Gold (XAU/USD) marks another milestone on Wednesday, smashing through the $4,000 level for the first time as investors flock to the precious metal amid global economic and political uncertainty, coupled with a dovish Federal Reserve (Fed) outlook.

At the time of writing, XAU/USD is trading around $4,039, hovering below record territory after hitting an all-time high of $4,049 earlier in the day, with prices up more than 4% so far this week.

The latest leg higher comes despite a stronger US Dollar (USD) as political turmoil in France and Japan fuels safe haven demand, driving flows into both the Greenback and Gold. Meanwhile, the prolonged United States (US) government shutdown has added to market jitters, reinforcing demand for the yellow metal.

Persistent geopolitical risks, including the ongoing Russia-Ukraine war and tensions in the Middle East, along with concerns about global trade disruptions, have further bolstered Bullion’s safe-haven bid. Meanwhile, steady central bank buying and strong inflows into Gold-backed exchange-traded funds (ETFs) are helping to sustain the metal’s record-breaking rally.

Market movers: Fed Meeting Minutes take center stage as US shutdown stretches into second week

• Central banks worldwide are on track to buy 1,000 metric tons of Gold in 2025, marking a fourth consecutive year of hefty purchases as they diversify reserves away from US Dollar-denominated assets into Bullion, according to consultancy Metals Focus.
• The US government shutdown has entered its second week with no sign of resolution as Democrats refuse to provide the votes needed by the ruling Republican Senate to reopen federal agencies without a deal on extending expiring healthcare subsidies. The prolonged standoff is delaying key economic data, complicating the Fed’s policy outlook, while President Donald Trump’s threat of mass layoffs adds to economic uncertainty.
• The US Dollar Index (DXY), which tracks the value of the Greenback against a basket of six major currencies, extends gains for a third straight session, climbing to its highest level since August 5, hovering near 98.83 as political shake-ups in France and Japan prompt investors to rotate out of the Euro and Yen.
• US Treasury yields remain on the back foot across the curve as investors slightly increase bets on faster Fed easing in the months ahead, with 111 basis points (bps) of interest rate cuts priced in by December 2026, according to a Deutsche Bank report. The CME FedWatch Tool indicates markets are pricing a 94.6% chance that the Fed will lower rates by 25 bps at the October 29-30 FOMC meeting.
• In the absence of key economic releases, traders will focus on comments from Fed officials, with the release of the September Fed Meeting Minutes later on Wednesday, which is expected to provide more context behind the recent “risk-management” rate cut.

FXStreet