Gold prices (XAU/USD) are seeing a recovery, trading near $4,105 and breaking a two-day losing streak during Friday’s early European session. The precious metal is benefiting from a weaker US Dollar (USD). Traders are now looking to a series of Fed speeches later on Monday from John Williams, Philip Jefferson, Neel Kashkari, and Christopher Waller for further guidance.
The reopening of the US federal government has boosted market sentiment, which typically reduces demand for safe-haven assets like gold. This occurred after US President Donald Trump signed a funding bill last week, concluding the longest government shutdown in US history at 43 days, with federal employees instructed to return to work on Thursday.
Nevertheless, investors remain uncertain about the impact of delayed economic data releases following the shutdown. Analysts anticipate that the forthcoming US economic data will reveal weaknesses in the job market and a potential economic slowdown. Such outcomes could weaken the Greenback, thereby boosting the price of the USD-denominated gold, as the non-yielding yellow metal often thrives during periods of economic uncertainty and in low-interest-rate environments.
However, the potential for significant gains in gold might be constrained by recent hawkish remarks from US Federal Reserve (Fed) officials, which are dampening hopes for a December interest rate cut. For instance, Kansas City Fed President Jeffery Schmid stated on Friday that monetary policy should “lean against demand growth” and deemed the current Fed policy “modestly restrictive” and appropriate.
According to the CME FedWatch Tool, financial markets are now pricing in a roughly 54% chance of a 25 basis point (bps) Fed rate cut at its December meeting, a decrease from the 62.9% probability priced in earlier last week.
