Gold (XAU/USD) climbed above $4,050 during early European trading hours on Monday, extending its recent gains as investors weighed concerns about global economic growth and increasing expectations of a Federal Reserve (Fed) rate cut.
The precious metal benefited from a softer US economic outlook after disappointing private payroll data and a weaker-than-expected University of Michigan (UoM) Consumer Sentiment Index. Lower interest rates tend to reduce the opportunity cost of holding non-yielding assets like gold, providing support for prices.
Easing political and trade risks weigh on safe-haven demand
Meanwhile, signs that the US government shutdown could soon end may undermine demand for safe-haven assets such as gold. The US Senate is set to vote on a bill Monday that could bring an end to the longest government shutdown in US history. Additionally, easing trade tensions between the US and China the world’s two largest economies could further limit upside potential for gold in the near term.
Traders will closely monitor Thursday’s release of the US October Consumer Price Index (CPI). The headline CPI is expected to increase by 0.2% month-on-month, while core CPI is projected to rise 0.3%. Friday’s US Retail Sales data will also be in focus for further clues on consumer spending strength.
Daily digest market movers: gold gains momentum as uncertainty grows
The US Senate has adjourned until 11 a.m. Monday to continue considering legislation to reopen the government after a late-night breakthrough. House Democratic leaders have informed members that votes could take place later this week, with lawmakers to receive 36 hours’ notice before any vote due to ongoing travel disruptions caused by the shutdown.
According to Bloomberg, the government funding impasse may be nearing resolution after centrist Senate Democrats agreed to support a deal that would reopen federal agencies and fund operations through January 30.
In global trade developments, China’s Ministry of Commerce announced Sunday that it would temporarily lift restrictions on exports of certain “dual-use items” including gallium, germanium, antimony, and super-hard materials to the US. The suspension, effective through November 27, 2026, follows Friday’s decision to ease export controls on some rare earth metals and lithium battery components.
The University of Michigan’s latest survey showed consumer sentiment dropped to 50.3 in November the weakest since June 2022 from 53.6 in October, missing expectations of 53.2. Markets now price in a roughly 66% chance of a 25-basis-point Fed rate cut in December, according to the CME FedWatch tool.
Technical outlook: gold remains bullish above key 100-day EMA
Gold continues to trade in positive territory, maintaining its bullish bias as prices stay above the 100-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) remains above the midline near 55.0, indicating sustained upward momentum in the near term.
A decisive break above the October 22 high of $4,161 could open the door toward the $4,200 psychological level, with further resistance seen near the upper Bollinger Band at $4,325.
Conversely, if bearish pressure emerges and prices fall consistently below $4,000, sellers could regain control, driving XAU/USD toward the lower Bollinger Band near $3,835 and potentially the 100-day EMA around $3,705.
