I. Event Overview

As of local time November 3, the U.S. government has entered the 34th day of the shutdown, making it one of the longest government shutdowns in recent history. Nevertheless, senior leaders from both the Republican and Democratic parties in the U.S. Senate have expressed optimism about resolving the shutdown issue and discussed potential "breakthrough" solutions. This dialogue indicates that despite lingering differences—particularly over healthcare spending—the government shutdown may be on the verge of ending.

The shutdown stems from a deadlock between Congress and President Trump, resulting in the closure of a series of federal programs, including assistance for low-income families, military pay, and airport operations. Without the passage of relevant legislation, some functions of the U.S. government have been suspended, thousands of federal employees have been furloughed, and approximately $1.7 trillion in annual government spending has been frozen.

While Senate Majority Leader John Thune stated that he is optimistic about ending the shutdown, he also warned against rushing the process, saying, "We shouldn’t push the process too hastily." Currently, the Democratic Party has linked the government funding bill to the extension of U.S. health insurance subsidies, which are about to expire. At the same time, food stamp benefits for low-income families are also facing expiration or only partial funding.

II. Market Impact Analysis

Impact of the Government Shutdown on Market Sentiment

The ongoing U.S. government shutdown has suspended the release of all official data, exacerbating market uncertainty. Although there are now signs of a resolution to the shutdown, investors remain cautious about the future fiscal policies and economic direction of the U.S. government. Uncertainties in geopolitics and domestic policies usually drive safe-haven demand, which may lead to an increase in demand for gold as a safe-haven asset.

Growth Potential of Gold Demand

As the government shutdown continues and uncertainty about the economic outlook increases, the safe-haven demand for gold is expected to rise. Investors tend to increase their gold holdings in similar political and economic risk scenarios to hedge against potential economic and financial risks. This may push up demand for gold and lead to an increase in gold prices.

III. Technical Analysis

As of 13:25 Beijing Time on November 4, the spot gold price was quoted at $3,985.06 per ounce, showing a volatile downward trend. In the short term, the fluctuation range of gold prices is relatively small, and market sentiment is cautious.

• The RSI (14) value is 40.565, in the neutral-to-sell zone, indicating relatively weak market sentiment.
• The STOCH (9,6) is 28.536, entering the oversold zone.
• The STOCHRSI (14) is 6.434, also in the oversold zone, further confirming that the market may be near the bottom.
• The MACD (12,26) is -5.53 (negative), indicating strong short-selling momentum in the market in the short term and downward pressure on gold prices.

Overall, gold prices may still face downward risks in the short term. Although the market has entered the oversold zone, the overall short-selling pressure is relatively strong, which may lead to a further decline in gold prices.

IV. Outlook

Hope for Ending the Government Shutdown

As the U.S. government shutdown persists, overall market uncertainty has intensified. If the shutdown can be ended this month and various official data can be released next month, it will help gold break through its current range.

Gold’s Inflation-Hedging Attribute

The U.S. government’s fiscal policies and debt issues may lead to rising inflation expectations, further enhancing the attractiveness of gold as an inflation-hedging tool. Gold’s value-preserving function may thus gain favor in the market.

Summary

As signs of the U.S. government shutdown easing emerge, investors remain cautious about the future, but demand for gold as a safe-haven asset remains strong. Investors should pay close attention to further developments in the government shutdown issue. In the short term, gold may continue to fluctuate at its current level and has the potential for further growth.