Gold and silver once again see both bulls and bears wiped out! The risk of "getting in at the top" is intensifying.

Due to the U.S. government shutdown and weak private sector employment data, traders have increased their bets on a Federal Reserve rate cut. Spot gold once again surpassed the 3890 mark during Thursday's session, but then continued to fall, dropping more than $30 from the day's high; spot silver rose above $48/ounce during the session, hitting a new high since May 2011, but later followed gold lower, erasing its intraday gains.

Matt Simpson, Senior Analyst at City Index, said: "Ahead of the nonfarm payrolls report, weak ADP employment data has reignited market bets on a Fed rate cut, which in turn has weighed on the U.S. dollar. The U.S. government shutdown has also helped push gold prices higher. Futures market positions show that large speculators and fund managers are still chasing the rally; although their net long positions have increased, they have not yet reached extreme levels."

Sunil Kumar Dixit, Chief Technical Strategist at SKCharting.com, pointed out that from a technical perspective, gold remains in a bullish trend and is likely to continue its upward momentum. Supporting factors include: gold prices remain stable above the immediate support level of $3852 and are operating within a strong ascending parallel channel on the 4-hour chart. However, to further expand gains, gold needs to decisively break through and hold above the immediate resistance level of $3898; after breaking through, the next target is $3914, followed by a challenge of $3934.

As the monthly Relative Strength Index (RSI) reading reaches 89-90, gold is clearly still in overbought territory, which suggests investors should remain cautious at high levels—if gold falls below key support levels, it could quickly trigger profit-taking pressure, especially if news emerges of a potential reversal in the U.S. government shutdown, which could strengthen the dollar and U.S. Treasury yields, making such pressure more pronounced.

If gold falls below $3872, it is expected to retest the $3860-$3858 range; if it further breaks below the key support level of $3852, it may test $3845, and could even fall to the $3830-$3820 range.

Due to partisan disagreements preventing Congress and the White House from reaching a funding agreement, the U.S. government shutdown has entered its second day. This shutdown may delay the release of several economic indicators, including the highly anticipated nonfarm payrolls report originally scheduled for Friday. As a result, economists, traders, and policymakers are relying more on non-government data, such as Wednesday's ADP report, which showed U.S. private sector employment fell by 32,000 in September, while August data was revised down to a decrease of 3,000.

Traders have increased their bets that the Federal Reserve will cut rates twice more this year to support the persistently weak labor market. Lower borrowing costs often boost non-yielding gold; at the same time, when the dollar weakens, gold prices become cheaper for most buyers.

According to the CME FedWatch Tool, traders believe the probability of the Fed cutting its key interest rate by 25 basis points this month is close to 100%.

Goldman Sachs noted in a report: "Driven by increased speculative positions and a much larger-than-expected rise in Western ETF holdings, our forecast for gold prices to reach $4,000 per ounce by mid-2026 and $4,300 per ounce by December 2026 faces increasing upside risk."

The world's largest gold ETF—SPDR Gold Trust—announced that its holdings increased by 0.59% on Wednesday compared to Tuesday, reaching 1,018.89 tons, the highest level since July 2022.

According to data compiled by Bloomberg, the monthly net inflow into gold ETFs in September was the highest in three years. Chinese investors are also increasing their holdings in gold ETFs: last month, all four of China's most popular gold ETFs saw capital inflows.

Meanwhile, some Federal Reserve policymakers remain cautious about the interest rate path. Chicago Fed President Goolsbee said on Wednesday that his concerns about inflation are growing, making him inclined to "act cautiously" on rate cuts.