Gold (XAU/USD) traded within familiar ranges on Wednesday, supported by a mild risk-off tone in global markets that underpinned demand for the safe-haven metal. At the time of writing, XAU/USD hovered around $3,975, recovering modestly from Tuesday’s low of $3,928.
The risk-off sentiment stemmed from a broad sell-off in global equities, led by declines in US technology and AI-related stocks. Concerns over stretched valuations and warnings from Wall Street executives about a potential market correction sparked the downturn, which spread across Asian and European sessions. Meanwhile, continued uncertainty surrounding the US government shutdown, now in its 36th day, added to the cautious mood.
However, gold’s rebound lacked strong follow-through buying, as the resilient US Dollar (USD) continued to limit upside attempts. Still, persistent risk aversion and steady demand near recent lows are likely to keep downside pressures contained.
Market movers: Dollar strengthens on upbeat US data; attention turns to Supreme Court tariff case
Fresh US data releases reinforced optimism about the economy’s resilience. The ADP Employment Change report showed private-sector payrolls rising by 42,000 in October, exceeding forecasts of 25,000 after a 32,000 drop in September. Similarly, the ISM Services PMI rebounded to 52.4 in October from 50.0, marking a return to expansion. The New Orders Index rose to 56.2, its highest level since October 2024, while Prices Paid jumped to 70.0, reflecting renewed inflationary pressures.
The US Dollar Index (DXY) advanced to 100.30, its highest since May 29, as the greenback extended its rally for a sixth straight session amid fading expectations for additional Federal Reserve (Fed) rate cuts.
In political developments, US President Donald Trump signed two executive orders on Tuesday aimed at easing trade tensions with China. Effective November 10, tariffs on fentanyl-linked imports from China will be reduced from 20% to 10%, while reciprocal tariffs on Chinese goods will remain at 10% for another year extending the truce that had previously lowered rates from 34%. In response, Beijing temporarily lifted some retaliatory duties on US agricultural and industrial exports.
However, the legality of the Trump administration’s tariff measures is back under scrutiny as the US Supreme Court prepares to hear arguments over whether the use of emergency powers to impose broad import duties was lawful. Two lower courts have already ruled the tariffs illegal, and the upcoming decision could redefine the scope of presidential authority in trade policy.
The ongoing US government shutdown continues to dominate sentiment, now marking its 36th day — the longest in American history. The funding impasse has delayed several key economic reports, heightening concerns about its broader economic toll.
Monetary policy uncertainty also persists following last week’s 25-basis-point (bps) Fed rate cut. Fed Chair Jerome Powell reiterated that further easing this year is “not a foregone conclusion,” while diverging views among Fed officials on inflation and labor dynamics have left markets guessing about the likelihood of another cut in December.
According to the CME FedWatch Tool, traders now assign a 68% probability of a December rate cut — sharply lower than 94% before Powell’s comments. With official data releases disrupted by the shutdown, the ADP and ISM reports are likely to play a larger role in shaping near-term Fed expectations.
Technical analysis: Bearish bias holds below 21-SMA, RSI signals weak momentum
Gold remains confined within a tight range between $4,050 and $3,900 on the 4-hour chart, reflecting ongoing market indecision. The short-term outlook tilts slightly bearish, as the metal continues to trade below its 21-period Simple Moving Average (SMA) near $3,990, which acts as immediate resistance. A decisive break above the $4,020–$4,050 zone could attract renewed bullish momentum.
On the downside, repeated buying interest near $3,900 continues to provide a sturdy floor. A sustained move below this level could pave the way for deeper losses toward lower support zones.
The Relative Strength Index (RSI) holds around 44, signaling subdued momentum and suggesting that gold may remain range-bound in the near term.
