Gold (XAU/USD) pushed above $4,050 during early European trading on Monday, buoyed by mounting doubts over the US economic outlook. Investors have ramped up their expectations for Federal Reserve rate cuts after softer‐than‐expected private payroll figures and a weaker University of Michigan Consumer Sentiment reading. Since lower interest rates reduce the opportunity cost of holding non‐yielding assets, these bets have lent support to gold.
However, potential relief from the ongoing US government shutdown and easing US–China trade tensions could cap gold’s gains in the near term. Senators are voting Monday on a proposal that would reopen federal agencies and extend funding, while Beijing has signaled it will lift certain export controls on dual‐use materials—both developments that can undermine gold’s safe‐haven appeal.
Key US data will remain in focus this week. On Thursday, markets await October’s Consumer Price Index, where headline inflation is forecast to rise 0.2% month-on-month and core prices by 0.3%. Friday brings September retail sales, another gauge of domestic demand.
Daily Digest – Market Movers:
- The Senate recessed until 11 a.m. Monday, when it will resume debate on the government funding bill. House Democratic leaders say votes are planned later in the week, with 36-hour notice required.
- Bloomberg reports a centrist group of Senate Democrats has agreed to back a short-term funding package that would keep certain departments running through January 30 and others funded for a full year, while restoring back pay for furloughed workers.
- China’s Ministry of Commerce announced on Sunday a temporary suspension of export restrictions on gallium, germanium, antimony and other “dual-use” materials destined for the US, effective immediately through November 27, 2026.
- This follows Friday’s lift on additional export curbs covering rare earths and lithium battery components.
- The University of Michigan’s Consumer Sentiment Index dipped to 50.3 in November—the weakest since June 2022—versus 53.6 in October and below the 53.2 consensus.
- CME FedWatch sees roughly a 66% chance of a 25 bp Fed rate cut in December.
Technical Outlook – Bullish Bias Holds Above Key 100-Day EMA
Gold remains in positive territory as it trades comfortably above its 100-day exponential moving average. The 14-day RSI sits around 55, signaling that upward momentum is intact. A sustained move above October 22’s high of $4,161 could pave the way toward the $4,200 psychological mark, with the upper Bollinger Band near $4,325 as the next upside target.
Conversely, if price action flips bearish and gold stalls below $4,000, sellers may push XAU/USD down toward the lower Bollinger Band around $3,835, followed by support at the 100-day EMA near $3,705.
