Key Points
- Spot gold fell 0.8% to $4,011.85 per ounce, while U.S. futures dropped 1.6% to $4,010.90.
- Fed rate cut odds declined to 42%, down sharply from nearly 100% earlier this month.
Gold prices retreated for a fourth straight session on Tuesday, dragged lower by a stronger U.S. dollar and waning hopes for a December rate cut by the Federal Reserve.
As of 06:46 GMT, spot gold traded at $4,011.85 per ounce, while December futures settled lower at $4,010.90. The Dollar Index (USDX) held near recent highs after Monday’s sharp rise, keeping bullion under pressure by making it more expensive for holders of other currencies.
Rate Cut Odds Drop Sharply
Investor sentiment shifted after lawmakers reached a deal to end the longest-ever U.S. government shutdown, restoring access to delayed economic data and reinforcing the view that the Fed may hold rates steady in December.
Fed Vice Chair Philip Jefferson stated on Monday that policymakers should “proceed slowly” with further rate reductions, echoing other officials who have recently stressed caution.
According to ANZ, expectations for a December rate cut plunged to 42% from nearly 100% earlier this month, weighing heavily on non-yielding assets like gold.
U.S. Labour Data Ahead
Attention now turns to upcoming U.S. economic data, particularly Thursday’s nonfarm payrolls report, for signs of labour market cooling that could influence the Fed’s decision next month.
While the short-term trend for gold appears weaker, analysts note that long-term fundamentals remain intact. ANZ highlighted several structural tailwinds including global uncertainty, concerns about U.S. debt sustainability, de-dollarisation trends, and persistent central bank demand, all of which could sustain investment appetite over the medium term.
Technical Analysis
XAU/USD trades near $4,009.72, down 0.89%, marking its lowest level in over a week. The daily chart shows gold testing key support near $4,000, with the short-term moving averages (5, 10, 30) turning lower, a sign of fading momentum.
The MACD histogram remains negative, indicating continued bearish pressure, though the pace of decline has slowed. Immediate resistance lies around $4,050–$4,080, while support sits at $3,980, followed by $3,950.
Cautious Forecast
If the U.S. dollar extends gains and incoming data reinforces a “higher-for-longer” rate outlook, gold may continue to consolidate below $4,050 in the short term.
However, safe-haven demand could return swiftly should economic data weaken or cross-border risks flare up again, keeping prices supported within a broader $3,950–$4,150 range.
