Gold (XAU/USD) is paring earlier gains on Wednesday as a strengthening US Dollar (USD) limits its upward movement. At the time of writing, XAU/USD is trading around $4,090, having eased from an intraday high near $4,132.
Despite this pullback, the downside for Gold remains restricted due to a prevailing risk-off sentiment in global markets, which continues to bolster safe-haven demand for the metal. Global equities are under pressure amid concerns over extended tech valuations, keeping investors defensive as they anticipate Nvidia’s earnings release. Market caution is also elevated ahead of the Federal Open Market Committee (FOMC) Meeting Minutes later today, with particular focus on Thursday’s delayed September Nonfarm Payrolls (NFP) report.
Adding to the cautious mood, growing skepticism among Federal Reserve (Fed) officials regarding another interest-rate cut in December is clouding the monetary policy outlook. As officials remain divided between persistent inflation risks and signs of labor-market weakness, traders are scaling back expectations for further monetary easing, which could act as a near-term headwind for Gold.
Market Movers: Focus on Fed Minutes and NFP
The US Dollar Index (DXY), which measures the Greenback’s value against six major currencies, is hovering around the psychological 100.03 mark, a nearly two-week high, up approximately 0.43% on the day.
The October FOMC Meeting Minutes, scheduled for release at 19:00 GMT on Wednesday, will be closely scrutinized for insights into last month’s 25 basis point (bps) rate cut, which set the target range to 3.75%-4.00%. Traders are seeking clarity after Fed Chair Jerome Powell indicated that a December cut is “not a foregone conclusion.” The minutes are expected to be a significant market driver as investors look for clues on whether the Committee sees room for additional easing this year.
Soft US labor data has contributed to the cautious atmosphere. Tuesday’s ADP report showed US private payrolls decreasing by an average of 2,500 per week in the four weeks to November 1, following an 11.25K decline in the previous period. The Labor Department also resumed releasing its backlog of weekly Jobless Claims, with initial claims at 232,000 and continuing claims rising to 1.957 million for the week ending October 18, the highest since early August. This data reinforces signs of a cooling labor market.
According to the CME FedWatch Tool, markets are currently assigning a 46.6% probability of a December rate cut, down from 62.9% a week ago. All attention is now firmly on Thursday’s September Nonfarm Payrolls (NFP) report. Economists expect payrolls to increase by approximately 50,000, up from the 22,000 increase seen in August. A weaker-than-expected reading could rapidly alter market expectations for further easing.
US President Donald Trump stated on Tuesday that his administration has begun interviews for the next Federal Reserve chair, with a decision expected before year-end. The shortlist reportedly includes Kevin Hassett, Kevin Warsh, Christopher Waller, Michelle Bowman, and Rick Rieder.
Technical Analysis: Constructive Bias Intact Above 100-SMA
Here’s an image that illustrates gold’s price action, showing its gains being trimmed but with limited downside, all against the backdrop of anticipation for the Fed Minutes.
From a technical perspective, Gold continues to attract buyers on dips within its existing uptrend. On the 4-hour chart, prices have moved back above the 100-period Simple Moving Average (SMA), which enhances the short-term bullish bias. The recent rebound has led XAU/USD to test the 50-period SMA, closely aligned with the $4,100-$4,120 resistance zone. A sustained breach above this area would strengthen bullish momentum, potentially opening the path towards $4,150 initially, followed by the $4,200 region.
Conversely, the 100-period SMA provides immediate support, preceding the psychological $4,000 level. Momentum has also improved, with the Relative Strength Index (RSI) climbing back above the 50 threshold after recently nearing oversold territory, indicating a recovery in buying pressure.
*(Correction: This story was updated on November 19 at 15:45 GMT to reflect that the FOMC Meeting Minutes are scheduled for 19:00 GMT, not 18:00 GMT as initially reported.)*
