Gold (XAU/USD) extended Tuesday’s rebound from just below the $4,000 psychological level—its lowest point in nearly two weeks—gaining upward momentum for a second consecutive session on Wednesday. The metal is now trading near the upper boundary of its weekly range, with bulls looking for a sustained break above the $4,100 mark as focus turns to the Federal Open Market Committee (FOMC) minutes due later today.
Safe-haven demand and softer USD support gold
The delayed US Nonfarm Payrolls (NFP) report, scheduled for release Thursday, is expected to play a key role in shaping expectations for the Federal Reserve’s rate-cut trajectory. For now, concerns about the US economic backdrop are limiting the US Dollar’s (USD) upside, keeping it below a one-week high and in turn supporting the non-yielding metal.
Investor sentiment remains fragile amid worries about weakening US economic momentum, partly tied to the prolonged government shutdown. This has increased safe-haven demand for gold during the Asian session on Wednesday.
Geopolitical tensions are also helping bolster the metal. Ukraine reported strikes on Russian military targets using US-supplied ATACMS missiles, while President Volodymyr Zelenskiy is expected to meet with Turkish officials to revive peace talks. The Kremlin has indicated it will not send representatives, keeping geopolitical risks elevated.
Fed policy uncertainty remains in focus
The US Dollar has struggled to attract follow-through buying as expectations of a December rate cut are tempered but not fully dismissed. Recent remarks from Federal Reserve officials highlight caution: Vice Chair Philip Jefferson signalled the need for a gradual approach, while Governor Christopher Waller emphasised labour-market risks as justification for further easing.
Fresh data from the US Labor Department showed continuing unemployment claims rising to 1.957 million in the week ending October 18, hinting at a softening labour market. This makes the upcoming NFP release and FOMC minutes particularly critical for traders assessing the Fed’s next move.
Gold technical outlook: $4,100 remains the key hurdle
Gold found solid support on Tuesday near the 200-period Exponential Moving Average (EMA) on the 4-hour chart, but mixed technical indicators suggest caution before committing to additional upside.
A decisive breakout above the $4,100 barrier could spark short covering, pushing XAU/USD toward the $4,152–4,155 zone, with the $4,200 level emerging as the next major target.
On the downside, initial support lies at $4,037–4,036, followed by the 200-period EMA near the $4,000 mark. A clear move beneath this zone would open the door for a slide toward $3,931 and potentially the $3,900 handle, with the late-October low around $3,886 acting as a deeper support level.
