The cooling of expectations for a Fed rate cut and the strengthening of the dollar are putting pressure on gold prices, which are expected to remain volatile in the short term.
2025-11-05 10:41:32
Gold prices rose slightly to around $3,950 an ounce during Asian trading hours. The recent US government shutdown has entered its sixth week and is poised to become the longest fiscal deadlock in US history.
The economic risks and global uncertainties stemming from the fiscal impasse have prompted investors to continue seeking safe-haven assets, thus providing some support for gold. At the same time, geopolitical tensions have also contributed to the safe-haven appeal of gold.
However, gold's rise was constrained by both a strong dollar and waning expectations of a Federal Reserve rate cut. At its October meeting, the Fed maintained the target federal funds rate at 3.75%-4.0%, and Chairman Powell stated that further rate cuts this year were "not a certainty."
Traders using the CME FedWatch tool have calculated that the probability of a December rate cut has fallen from 93% last week to about 70%. A strong dollar has increased the cost of dollar-denominated gold, suppressing overseas demand and limiting gold's short-term upside potential.
"A hesitant Fed and a strong dollar are the main reasons for today's gold pullback," noted Ole Hansen, head of commodity strategy at Saxo Bank.
In addition, the market is awaiting the US October ADP non-farm payroll data (expected to add 25,000 jobs) and the ISM services PMI to assess economic activity and the direction of the Federal Reserve's policy.
From a technical perspective, gold maintains a bullish structure. The daily chart shows that the price continues to stay above the 100-day exponential moving average (EMA), upholding the long-term bullish trend. However, the 14-day RSI is near the midline, indicating neutral short-term momentum and suggesting a possible consolidation.
Key resistance levels to watch are the psychological level of $4,000. A break above this level could lead to further gains towards $4,046 (the high on October 31) and $4,150 (the high on October 23).
The short-term support level is at $3,835 (lower Bollinger Band). A break below this level could lead to a pullback to $3,722 (the low of September 25). Overall, gold is likely to consolidate in the short term, but safe-haven demand continues to provide support. The dollar's performance, Federal Reserve policy, and the US fiscal impasse are the key factors determining the next move of XAU/USD.
Editor's Note:
Gold's recent price action has exhibited a pattern of "coexisting safe-haven support and dollar suppression." The US government shutdown and geopolitical risks have fueled safe-haven demand, but a strong dollar and waning expectations of a Fed rate cut have limited the upside potential, suggesting that the market will likely remain in a consolidation phase in the short term.
The economic risks and global uncertainties stemming from the fiscal impasse have prompted investors to continue seeking safe-haven assets, thus providing some support for gold. At the same time, geopolitical tensions have also contributed to the safe-haven appeal of gold.
However, gold's rise was constrained by both a strong dollar and waning expectations of a Federal Reserve rate cut. At its October meeting, the Fed maintained the target federal funds rate at 3.75%-4.0%, and Chairman Powell stated that further rate cuts this year were "not a certainty."Traders using the CME FedWatch tool have calculated that the probability of a December rate cut has fallen from 93% last week to about 70%. A strong dollar has increased the cost of dollar-denominated gold, suppressing overseas demand and limiting gold's short-term upside potential.
"A hesitant Fed and a strong dollar are the main reasons for today's gold pullback," noted Ole Hansen, head of commodity strategy at Saxo Bank.
In addition, the market is awaiting the US October ADP non-farm payroll data (expected to add 25,000 jobs) and the ISM services PMI to assess economic activity and the direction of the Federal Reserve's policy.
From a technical perspective, gold maintains a bullish structure. The daily chart shows that the price continues to stay above the 100-day exponential moving average (EMA), upholding the long-term bullish trend. However, the 14-day RSI is near the midline, indicating neutral short-term momentum and suggesting a possible consolidation.
Key resistance levels to watch are the psychological level of $4,000. A break above this level could lead to further gains towards $4,046 (the high on October 31) and $4,150 (the high on October 23).
The short-term support level is at $3,835 (lower Bollinger Band). A break below this level could lead to a pullback to $3,722 (the low of September 25). Overall, gold is likely to consolidate in the short term, but safe-haven demand continues to provide support. The dollar's performance, Federal Reserve policy, and the US fiscal impasse are the key factors determining the next move of XAU/USD.
Editor's Note:
Gold's recent price action has exhibited a pattern of "coexisting safe-haven support and dollar suppression." The US government shutdown and geopolitical risks have fueled safe-haven demand, but a strong dollar and waning expectations of a Fed rate cut have limited the upside potential, suggesting that the market will likely remain in a consolidation phase in the short term.
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- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
