Gold prices are starting the week on the front foot, rising to fresh all-time highs above $3,800. The precious metal is finding support as the US dollar extends its losses against other major currencies — a dynamic that is positive for gold due to the inverted price correlation between the two assets. The greenback is under renewed pressure not only because of increasingly dovish Federal Reserve expectations, but also due to fears that a bipartisan funding deadlock in the US Congress could lead to a government shutdown at the beginning of October. Such a scenario would deliver a significant blow to US economic activity and could also delay the release of key data, including Friday’s non-farm payrolls report. Against this backdrop — and with ongoing geopolitical and economic uncertainty enhancing gold’s safe-haven appeal, alongside continued large-scale purchases by central banks in China and elsewhere — the path of least resistance for bullion remains tilted to the upside, creating scope for further gains towards the $3,900 level.
Ricardo Evangelista, ActivTrades
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