Gold (XAU/USD) held firm during Friday’s North American session as dovish signals from Federal Reserve (Fed) officials boosted expectations for a rate cut at the December meeting. At the time of writing, XAU/USD trades near $4,096, up 0.53%, after touching an intraday high of $4,101.
XAU/USD Edges Higher as Mixed US Data Fuels Shifting Rate Expectations
Gold has fluctuated over the past three sessions as traders assess whether the metal has room to extend its rally.
Fresh US data continues to reflect a resilient economy with a strong labor market but persistent price pressures.
Dovish remarks from New York Fed President John Williams and Governor Stephen Miran prompted markets to sharply raise the odds of a December rate cut. In contrast, Boston Fed President Susan Collins and Dallas Fed President Lorie Logan argued for keeping policy restrictive.
As a result, traders are now pricing in a 71% probability of a 25-basis-point cut in December – a dramatic jump from roughly 31% earlier in the day.
The latest data showed business activity expanding while US consumer sentiment for November fell close to multi-year lows, according to the University of Michigan. Inflation expectations were revised lower across both one-year and five-year horizons.
Daily Market Movers: Gold Bulls Ignore Mixed US Data
New York Fed President John Williams said policymakers can still cut rates in the “near-term,” reinforcing the shift in market pricing.
Fed Governor Stephen Miran added that Thursday’s Nonfarm Payrolls figures support a December cut and stated that if his vote were decisive, he “would vote for a 25-bps cut.”
Dallas Fed President Lorie Logan, however, said rates should stay on hold “for a time,” noting she finds it “difficult” to support a December cut. Boston Fed President Susan Collins agreed, stressing that a “restrictive policy is very appropriate right now.”
On the data front, the S&P Global Manufacturing PMI slipped to 51.9 in November from 52.5, missing estimates, while the Services PMI climbed to 55, topping expectations. Survey responses pointed to improving business confidence and optimism about additional rate cuts and the government reopening.
The University of Michigan Consumer Sentiment Index edged up to 51 from a preliminary 50.3 but declined from October’s 53.6, remaining near the lows from June 2022. Inflation expectations eased, with the one-year outlook falling to 4.5% and the five-year measure dropping to 3.4%.
The latest labor data showed September Nonfarm Payrolls rising by 119K, more than double the forecasted 50K. The Unemployment Rate rose to 4.4% but stayed within the Fed’s projected range.
Meanwhile, the US Dollar Index (DXY) added 0.07% to 100.28. Treasury yields were steady, with the 10-year yield at 4.08%. Real yields slipped two basis points to 1.84%, offering additional support to Gold prices.
Technical Analysis: Bulls Eye a Break Above $4,100
Gold’s uptrend is attempting to reassert itself, but a daily close above $4,100 remains essential for confirming further upside.
A successful breakout would expose $4,150 next, followed by a retest of the November 13 cycle high at $4,245.
Failure to hold above $4,100 would leave XAU/USD vulnerable to a pullback toward $4,050, followed by the November 18 swing low at $3,998 and the 50-day Simple Moving Average (SMA) at $3,981.
