Gold (XAU/USD) steadied on Wednesday as markets digested a fresh batch of mixed US economic data and maintained expectations for a dovish Federal Reserve (Fed). At the time of writing, XAU/USD trades near $4,225, modestly higher after briefly dipping below the $4,200 psychological level earlier in the session.
The latest US indicators offered conflicting signals on underlying momentum. ISM Services PMI inched up to 52.6 in November from 52.4, beating expectations of 52.1 and pointing to steady expansion. However, the ADP Employment Change report showed private payrolls contracting by 32,000, a sharp miss compared with forecasts for a 5,000 gain. October payrolls were revised higher to a 47,000 increase.
The ADP report underscores mounting signs of labour market cooling – a key concern for policymakers as Friday’s combined October–November Nonfarm Payrolls release approaches. With limited labour indicators available before next week’s Fed meeting, the data amplified expectations that the central bank is on track to cut rates.
Market pricing via the CME FedWatch Tool now implies an 88% probability of a 25 bps reduction, keeping the US Dollar (USD) under pressure and offering a favourable backdrop for bullion.
Geopolitical tensions also remain elevated after US envoys’ talks with Moscow on the Ukraine conflict failed to produce meaningful progress.
Dovish fed outlook and central bank demand support gold
Beneath the headline PMI reading, underlying ISM components softened: New Orders slipped to 52.9 from 56.2, while the Employment Index contracted for a sixth month at 48.9. Price pressures also fell, with the Prices Index dropping to 65.4—its lowest since April. S&P Global’s final Services PMI similarly pointed to moderating activity.
Political developments added to dovish sentiment. US President Donald Trump said he will announce his nominee for Fed Chair in early 2026, following comments earlier in the week that he already has a candidate in mind. NEC Director Kevin Hassett has emerged as the leading contender – a development markets interpret as likely to steer the Fed toward a more accommodative stance.
The US Dollar Index (DXY) has extended its decline, hovering near 98.99 – its lowest level since late October – and marking a seventh straight day of losses.
On the geopolitical front, US envoy Steve Witkoff met Russian President Vladimir Putin in Moscow to discuss proposals to end the Ukraine conflict, but the meeting ended without a breakthrough. Despite describing talks as “constructive,” Russian officials acknowledged no compromise had been reached on key territorial issues.
Gold also drew support from robust central bank buying. According to a World Gold Council report released on December 2, central banks added a net 53 tonnes of Gold in October—the largest monthly increase of the year and a 36% rise from September.
Technical analysis: gold consolidates below 21 SMA
On the 4-hour chart, the 21-period Simple Moving Average (SMA) continues to trade above the 100-period SMA, preserving a bullish broader structure. Price currently sits just below the 21 SMA at $4,212.44 while holding comfortably above the 100 SMA at $4,134.37, keeping the near-term outlook balanced.
The 14-period Relative Strength Index (RSI) stands at 52.84, neutral after cooling from overbought territory, while the 14-period Average Directional Index (ADX) has eased to 18.29, signalling weak trend strength.
A firm push above the 21 SMA would restore bullish momentum and open the door for renewed upside. Failure to reclaim that level, however, risks keeping XAU/USD capped and may trigger a pullback toward dynamic support at the rising 100 SMA, which continues to underpin the broader uptrend.
