Many traders believe that the strength of gold in recent times reflects the need for safety amid market fluctuations, political instability and weak US economic prospects.
Although the Senate has passed a budget bill - a signal that can improve market sentiment, investors are still cautious, wanting to wait for the final result before pouring strong capital into risky assets.
In that context, holding gold high is seen as a manifestation of better caution than excitement, as investors choose to maintain or increase their holdings of physical gold to prevent risks, amid expectations that a stable government will restore confidence in economic indicators.
However, it should be noted that although optimism is pushing up asset prices, there are still potential risks due to structural uncertainties, especially in fiscal and monetary policies, which can cause strong market fluctuations as the current period passes.
Main factors affecting gold prices
The biggest driver continues to come from renewed investors' interest in US fiscal and monetary policy. The prolonged government shutdown disrupted key economic data, making it unpredictable when the Federal Reserve (FED) would issue an interest rate decision.
With the government reopening, the Fed's decision-making pace could be faster - with the possibility of a rate cut in December currently estimated by the CME FedWatch tool at 67%.
Lower interest rates mean lower real yields, making gold more attractive compared to other profitable assets. Along with that, the weak economic environment is still supporting gold prices - the ADP employment index shows that about 11,000 workers are cut each week, reflecting a weak job market and reinforcing the FED's "loose" stance.
The controversial policies of the Trump administration - from offshore oil exploitation, shareholder voting rights to regulatory reform - continue to increase concerns about operational efficiency, causing investors to seek gold as a defensive tool.
On a global scale, the trend of de-dollarization, the increase in central banks gold purchases, and strong capital flows into ETFs have created sustainable demand. The 57% increase in gold prices since the beginning of the year reflects the combination of speculative investment, diversification strategies of financial institutions and countries - factors that are creating a solid "floor", maintaining the upward momentum of this precious metal.
Technical analysis
Technically, gold is holding firm in its upward channel. Overcoming the resistance level of 4,050 USD/ounce has confirmed the medium-term uptrend, with the next resistance zone around 4,216 USD. If it breaks this zone, prices could try again at the historical peak of $4,381 (recorded on October 20).
The momentum indicators are all positive, the moving averages are stacked in an upward direction, showing that the cash flow is still flowing in. Investors believe that central bank and consumer demand for gold could push prices above $5,000/ounce in the fourth quarter of 2026.
However, traders should stay cautious. Although expectations of a Fed rate cut and a government opening are supporting psychology, prices could reverse rapidly if economic data changes unexpectedly. The next development of gold will depend on the US achieving a "soft landing" - slowing growth but not declining, helping to maintain low yields and abundant liquidity. If fiscal conditions tighten again, gold's gains could be temporarily limited.
The current price reflects the market's "cautious loss" trend. As shelter sentiment is strengthened by the US government's resumption of operations and expectations of increased interest rate cuts, investors are still choosing a selective approach.
Unpredictable political factors, opposite economic signals and geopolitical tensions make long-term gold holdings increasingly reasonable, especially for organizations looking to diversify their portfolios away from stock and USD risks.
