Gold (XAU/USD) remains pressured near a one-week low in early European trading on Tuesday, with sellers waiting for a decisive break below the psychological $4,000 level to extend the downtrend. A series of recent comments from key FOMC officials signaled limited appetite for further easing, prompting markets to scale back expectations for a December rate cut. This shift continues to weigh on the non-yielding metal.
Despite the less-dovish Fed outlook, the US Dollar (USD) has struggled to build on Monday’s gains amid worries that the record-long US government shutdown is cooling economic momentum. The softer USD, along with a broader risk-off tone, is offering modest support to gold. Traders are also cautious ahead of this week’s major releases, including the delayed US Nonfarm Payrolls (NFP) report and the FOMC Minutes.
Daily digest market movers: gold stays pressured by reduced Fed cut expectations
The longest US government shutdown on record has halted the flow of official economic data and dampened expectations for a December Fed rate cut. Several Fed officials have recently signaled a more cautious stance on policy easing.
Fed Vice Chair Philip Jefferson said Monday that upside inflation risks have eased somewhat and that current policy remains moderately restrictive. He added that the central bank should proceed carefully as monetary policy moves closer to neutral.
According to CME Group’s FedWatch Tool, the probability of a 25 bps December cut has now dropped below 50%, contributing to the fourth straight session of outflows from gold.
At the same time, concerns over the economic impact of the prolonged shutdown have prevented the USD from extending its advance, limiting gold’s downside.
With the US government now reopened, attention shifts back to delayed data releases—including Thursday’s NFP report. The FOMC Minutes may also provide fresh insight into the rate path and drive commodity markets.
Geopolitical tensions remain elevated after Russia reported advances in the Dnipropetrovsk region and a separate attack triggered an evacuation in a Romanian border village. Such risks continue to support safe-haven demand.
Gold bears wait for a clean break below $4,000 to confirm downside extension
XAU/USD recently failed to reclaim the 200-hour Exponential Moving Average (EMA), and the subsequent decline reinforces the bearish technical outlook. A sustained drop below $4,000 would validate the negative bias, exposing support at $3,931, followed by the $3,900 level and the late-October swing low near $3,886.
On the upside, any recovery is expected to face strong resistance at $4,053–4,055. A break above this zone could trigger short-covering and lift prices back toward the 200-hour EMA, positioned just below the $4,100 round figure. Sustained buying above that level would indicate that the recent pullback from the mid-$4,200s has run its course and may open the door to fresh gains.
