- Gold futures remain bullish as softer US jobs data and geopolitics lend adequate support.
- US economic concerns after the shutdown keep traders cautious as consumer sentiment and business activity fall.
- Traders remain focused on US NFP and FOMC meeting minutes to reposition themselves for fresh opportunities.
Gold futures edged higher on Wednesday as traders weighed shifting expectations for the Fed’s rate, softening labor market data, and an unsettled geopolitical backdrop. The December COMEX gold futures held modest gains above $4,100 area during the European session.
Fed’s December rate cut expectations have trimmed to 49%, as reflected by the CME FedWatch Tool. The probability was around 70% last week of a 25-basis-point rate cut. The recent commentary from Fed officials emphasized a cautious approach rather than a sense of urgency to ease monetary policy. Thomas Barkin, President of the Richmond Fed, noted that labor market indicators appear balanced. However, the Fed still lacks clarity on inflation, specifically whether inflation is on the right track towards its 2% target or not.
Gold futures traders remain focused on the delayed US NFP data for September, due out on Thursday, one of the significant inputs ahead of the December policy meeting. Initial jobless claims surged to 232k while continuing claims hit 1.957 million, igniting concerns that hiring momentum is eroding quickly than what headlines suggest. ADP figures also revealed an average of around 2,500 job reductions per week from late October to early November. These developments add pressure to the Fed’s delicate balancing act.
Beyond monetary policy, gold futures are seeking support from a deteriorating macroeconomic backdrop tied to the US government shutdown, which is suppressing risk appetite despite the reopening. Equities, consumer sentiment, and small business activity have all weakened, deepening concerns about US economic growth and indirectly supporting the bullion.
Geopolitics also adds another layer of volatility as Ukraine said it hit Russian territory with US-supplied ATACMS missiles. Meanwhile, President Zelenskiy is set to head for peace talks in Turkey. The uncertainty has increased the demand for safe-haven gold, despite headwinds from rising real yields.
From a market structure standpoint, gold prices remain in a broad range, with December contracts finding dip buying interest near the $4,000 area, while the upside remains capped by the $4,140-50 zone. Futures traders are now essentially waiting for the FOMC meeting minutes and the US NFP data. Both events could impact gold prices, as a dovish Fed tone and soft NFP numbers could push the metal towards fresh weekly highs. Conversely, a strong NFP and hawkish Fed could lead gold towards the $4,000 area.
