gold markets are currently navigating around the $4,150 level, reaching their highest point in nearly three months. This upward momentum coincides with growing optimism surrounding the potential end of the U.S. government shutdown, which could lead to the resumption of key economic data releases pivotal to markets’ expectations of Federal Reserve policy.
So far this week, gold has appreciated by more than 3%, buoyed by hopes that the reopening might restore visibility into U.S. economic indicators. These data are vital for traders betting on a possible interest rate reduction by the Fed in December. Currently, market probabilities suggest a 64% chance of a rate cut next month, according to CME Group’s FedWatch Tool. Recent economic reports have underscored a weakening labor market and disinflationary trends, fueling speculation about further easing measures.
Last week’s U.S. data releases heightened expectations for additional rate cuts. The University of Michigan Consumer Sentiment Index declined to 50.3 in early November, its lowest level in over three years, signaling consumer cautiousness. Additionally, layoffs reported by Challenger, Gray & Christmas surged by over 183% in October, marking one of the worst months for corporate redundancy in recent history. These developments, coupled with missed U.S. Nonfarm Payrolls and Consumer Price Index data for September and October respectively, strengthen the case for a rate reduction in December, which has bolstered gold ’s appeal.
With the U.S. bond markets closed on Tuesday in observance of Veterans Day, focus shifts to upcoming private sector employment data, which could reveal further insights into the health of the labor market. Market sentiment on Wall Street will also influence gold ’s direction as traders interpret the latest employment figures.
From a technical perspective, gold remains resilient, with the 14-day Relative Strength Index hovering around 60, suggesting buying momentum persists. Crucially, an acceptance above the $4,129 Fibonacci retracement level could open the path towards resistance at $4,200 and onwards to the record high of $4,382. Conversely, support levels are identified at the $4,086 21-day moving average, with the key psychological level at $4,050, and a critical threshold at $3,973, the 38.2% fib retracement. These levels will be instrumental in defining the near-term outlook amid ongoing economic uncertainties.
