A stronger dollar limited upside potential, and gold remained range-bound.
2025-11-06 01:48:07
On Wednesday (November 5), spot gold remained stable within its familiar range. A generally mild risk-averse tone in global markets provided demand support for the safe-haven metal. Spot gold traded around $3,981 during the session, a slight recovery from Tuesday's low of $3,928.
Risk aversion stemmed from a sharp sell-off in global stock markets, with weakness in US technology and AI-related stocks being the dominant factor. Concerns about overvaluation and warnings of a potential correction from Wall Street executives triggered the decline, which also spilled over into Asian and European markets. Meanwhile, the ongoing uncertainty surrounding the prolonged US government shutdown further exacerbated market caution.
However, gold's rebound lacked strong follow-through buying support, as a resilient dollar continued to limit its upward attempts. But persistent safe-haven demand and buying interest near recent lows should limit its downside.
Market drivers: Positive US data boosts the dollar; focus shifts to the Supreme Court tariff case.
The latest ADP employment report shows that U.S. private sector employment increased by 42,000 in October, exceeding the expected 25,000, while September's figure showed a decrease of 32,000. Meanwhile, the ISM non-manufacturing PMI rose to 52.4 in October from 50.0 in September, indicating that the sector has re-entered expansion territory. The new orders index climbed to 56.2, the highest level since October 2024, while the prices paid index rose to 70.0.
The dollar index rose to 100.30, its highest level since May 29. The dollar has extended its gains for the sixth consecutive trading day as market expectations for further interest rate cuts by the Federal Reserve have cooled.
The legality of the Trump administration's tariffs has once again come under scrutiny, with the U.S. Supreme Court scheduled to hear arguments later Wednesday regarding the legality of invoking emergency powers to impose broad-based tariffs on imports. Two lower courts have already ruled these tariffs illegal, and this latest ruling could impact the scope of future presidents' powers regarding trade policy.
On Wednesday, the U.S. government shutdown entered its 36th day, setting a new record for the longest shutdown in history. The ongoing funding impasse continues to delay the release of key economic data and raises concerns about its growing impact on the overall economy.
The outlook for monetary policy remains uncertain following the Federal Reserve's 25-basis-point rate cut last week. Fed Chairman Jerome Powell stated that further rate cuts this year are "not a done deal." However, disagreements among Fed officials regarding inflation and labor market conditions have left the market uncertain about the prospect of another rate cut in December.
According to the CME FedWatch Tool, the market is currently pricing in a 68% probability of a December rate cut, a significant drop from 94% before Powell's speech. Due to the ongoing government shutdown causing delays in the release of official economic data, ADP employment data and ISM non-manufacturing PMI data are likely to be key factors influencing the Fed's short-term expectations.
Technical Analysis: The 21-period SMA remains below, indicating a bearish bias.
(Spot gold hourly chart source: EasyForex)
On the 4-hour chart, gold remains trapped in a narrow range between $3,900 and $4,050, reflecting indecisiveness among traders. With the metal continuing to trade below the 21-period simple moving average (SMA) near $3,990, the short-term bias is slightly bearish, as this moving average is suppressing immediate upward attempts. A stronger rally would require a break above the $4,020-$4,050 range, which previously acted as support but has now become resistance, to attract renewed buying interest.
On the downside, persistent buying interest around $3,900 is currently providing solid support. A clear break below this level could open up further downside potential.
The Relative Strength Index (RSI) remains around 49, lacking a clear direction, and gold is likely to continue its range-bound trading pattern in the short term.
Risk aversion stemmed from a sharp sell-off in global stock markets, with weakness in US technology and AI-related stocks being the dominant factor. Concerns about overvaluation and warnings of a potential correction from Wall Street executives triggered the decline, which also spilled over into Asian and European markets. Meanwhile, the ongoing uncertainty surrounding the prolonged US government shutdown further exacerbated market caution.
However, gold's rebound lacked strong follow-through buying support, as a resilient dollar continued to limit its upward attempts. But persistent safe-haven demand and buying interest near recent lows should limit its downside.
Market drivers: Positive US data boosts the dollar; focus shifts to the Supreme Court tariff case.
The latest ADP employment report shows that U.S. private sector employment increased by 42,000 in October, exceeding the expected 25,000, while September's figure showed a decrease of 32,000. Meanwhile, the ISM non-manufacturing PMI rose to 52.4 in October from 50.0 in September, indicating that the sector has re-entered expansion territory. The new orders index climbed to 56.2, the highest level since October 2024, while the prices paid index rose to 70.0.
The dollar index rose to 100.30, its highest level since May 29. The dollar has extended its gains for the sixth consecutive trading day as market expectations for further interest rate cuts by the Federal Reserve have cooled.
The legality of the Trump administration's tariffs has once again come under scrutiny, with the U.S. Supreme Court scheduled to hear arguments later Wednesday regarding the legality of invoking emergency powers to impose broad-based tariffs on imports. Two lower courts have already ruled these tariffs illegal, and this latest ruling could impact the scope of future presidents' powers regarding trade policy.
On Wednesday, the U.S. government shutdown entered its 36th day, setting a new record for the longest shutdown in history. The ongoing funding impasse continues to delay the release of key economic data and raises concerns about its growing impact on the overall economy.
The outlook for monetary policy remains uncertain following the Federal Reserve's 25-basis-point rate cut last week. Fed Chairman Jerome Powell stated that further rate cuts this year are "not a done deal." However, disagreements among Fed officials regarding inflation and labor market conditions have left the market uncertain about the prospect of another rate cut in December.
According to the CME FedWatch Tool, the market is currently pricing in a 68% probability of a December rate cut, a significant drop from 94% before Powell's speech. Due to the ongoing government shutdown causing delays in the release of official economic data, ADP employment data and ISM non-manufacturing PMI data are likely to be key factors influencing the Fed's short-term expectations.
Technical Analysis: The 21-period SMA remains below, indicating a bearish bias.
(Spot gold hourly chart source: EasyForex)
On the 4-hour chart, gold remains trapped in a narrow range between $3,900 and $4,050, reflecting indecisiveness among traders. With the metal continuing to trade below the 21-period simple moving average (SMA) near $3,990, the short-term bias is slightly bearish, as this moving average is suppressing immediate upward attempts. A stronger rally would require a break above the $4,020-$4,050 range, which previously acted as support but has now become resistance, to attract renewed buying interest.
On the downside, persistent buying interest around $3,900 is currently providing solid support. A clear break below this level could open up further downside potential.
The Relative Strength Index (RSI) remains around 49, lacking a clear direction, and gold is likely to continue its range-bound trading pattern in the short term.
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