Gold prices fluctuate as the weak dollar and risk asset preferences clash... XAU/USD trades within a box near a 3-week high

Federal Reserve Easing Expectations vs. Risk-On, a Standoff Over Gold Rise

Amid mixed market signals, gold(XAU/USD) remains steady near a 3-week high. Investors are paying close attention to whether it can break through the resistance at $4,150–$4,155. The macroeconomic data gap caused by the government shutdown has heightened concerns about economic slowdown, bringing the possibility of additional rate cuts in December into focus. This has weakened the dollar, acting as a positive factor for non-yielding assets like gold.

However, simultaneously, the increased likelihood of government reopening is fueling a risk-on global sentiment, which is eroding demand for safe assets. As economic recovery is expected, investors are showing a tendency to seek higher yields, limiting the buying momentum for gold.

The investment community is closely watching the speeches of FOMC members scheduled for today. Signals regarding the future rate cut path could be a key factor in determining the short-term direction of the dollar and XAU/USD.

Weak Employment Data and Economic Slowdown Reinforce the Fed’s Dovish Stance

As the U.S. government shutdown efforts materialize, market focus shifts to concerns over fiscal deterioration and weakening economic momentum. Some economists suggest that a prolonged government shutdown could have shaved 1.5–2.0 percentage points off quarterly GDP growth. Once routine economic data releases resume, these negative assessments could intensify.

Last week’s employment and consumer sentiment data fell short of expectations, already assigning a meaningful probability to a Fed rate cut next month. According to Reblio Labs, net employment in October decreased by 9,100, and government sector jobs declined by 22,200. The Chicago Fed’s estimate also signals rising unemployment, indicating a weakening labor market.

Within this context, expectations of Fed easing have been reaffirmed, causing the dollar to fall to a two-week low, while gold has been gradually accumulating momentum after surpassing $4,100. However, the global risk asset recovery trend remains a factor limiting safe-haven demand.

Technical Analysis: Breaking Out of Range Is Key, Buying Opportunity Around $4,100

From a technical perspective, XAU/USD has recovered 50% of the decline since the October low but is struggling to move higher. However, improvements in oscillator signals on daily and 4-hour charts support a bullish scenario.

A clear breakout above the $4,150–$4,155 range could target a return to $4,200. This zone aligns with the 61.8% Fibonacci retracement, and surpassing it could open the door for further gains.

Support levels are at yesterday’s swing low of $4,100–$4,095, with the 38.2% Fibonacci retracement at $4,075 waiting below. If prices fall below $4,075, technical sell signals could trigger a drop to $4,025, then to the psychological support at $4,000. If bearish momentum continues, there is a possibility of retesting $3,936–$3,935, and ultimately revisiting the $3,900 level.