GBP/USD is off the lows, keeping its range near 1.3150 in European trading on Monday. The US Dollar struggles to regain traction amid risk appetite, induced by optimism over the US government reopening. Meanwhile, Pound Sterling traders await BoE-speak for further directives.
Gold rises amid global growth worries, rising Fed rate cut expectations
Gold price (XAU/USD) climbs to above $4,050 during the early European trading hours on Monday. The precious metal edges higher amid uncertainty over the US economic outlook. Traders ramped up bets on a US rate cut following weak US private jobs data and a downbeat University of Michigan (UoM) Consumer Sentiment Index survey. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal.
On the other hand, signs that the US government shutdown may end could undermine safe-haven assets such as Gold. US senators are voting on a deal on Monday that could end the longest government shutdown in history. Furthermore, easing trade tensions between the US and China, the world’s two largest economies, could also drag the yellow metal lower in the near term.
Traders will closely monitor the US October Consumer Price Index (CPI) inflation data later on Thursday. The headline CPI is expected to show an increase of 0.2% MoM in October, while the core CPI is projected to show a rise of 0.3% MoM during the same period. The US Retail Sales will be in the spotlight on Friday.
Daily Digest Market Movers: Gold gains momentum as uncertainty grows
- The Senate has adjourned until 11 a.m. on Monday, when it will continue considering legislation to reopen the government after tonight’s breakthrough. Meanwhile, House Democratic leadership has informed members that votes are planned later this week. Lawmakers will be given 36 hours’ notice before any votes are called as they manage travel delays and cancellations during the shutdown.
- The US government shutdown is nearing an end after a group of centrist Senate Democrats agreed to support a deal to reopen the government and fund some departments and agencies for the next year, per Bloomberg. The measure would fund certain departments through January 30.
- China’s Ministry of Commerce said on Sunday that it would temporarily lift its ban on approving exports of “dual-use items” related to gallium, germanium, antimony, and super-hard materials to the US. The suspension takes effect from Sunday until November 27, 2026.
- The latest measure followed a similar announcement on Friday, when China suspended additional export controls imposed in October on some rare earth metals and lithium battery components.
- The University of Michigan (UoM) revealed on Friday that the Consumer Sentiment Index eased to 50.3 in November, the lowest level since June 2022, from a final reading of 53.6 in October. This figure came in weaker than the expectation of 53.2.
- Markets now see nearly a 66% possibility of a 25 basis points (bps) rate cut in December, according to the CME FedWatch tool.
Gold’s bullish tone intact above the key 100-day EMA
Gold price trades in positive territory on the day. According to the daily chart, the positive outlook of the precious metal remains in play as the price holds above the key 100-day Exponential Moving Average. The path of least resistance is to the upside, with the 14-day Relative Strength Index (RSI) standing above the midline near 55.0. This displays the bullish momentum for the yellow metal in the near term.
Sustained trading above the October 22 high of $4,161 could send the yellow metal toward the $4,200 psychological level. Further north, the next hurdle to watch is the upper boundary of the Bollinger Band at $4,325.
If we start seeing bearish candlesticks and consistent trading below $4,000, that could signal that sellers are back in control. In that case, XAU/USD might return to the lower limit of the Bollinger Band of $3,835, followed by the 100-day EMA of $3,705.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
US shutdown end in sight as Democrats agree to funding deal — Bloomberg
The record-breaking US government shutdown is nearing an end after a group of centrist Senate Democrats agreed to support a deal to reopen the government and fund some departments and agencies for the next year, Bloomberg reported on Monday.
Under the agreement, federal employees would receive back pay, and states would resume delayed federal transfers. The measure would fund certain departments through January 30, while others would receive full-year appropriations.
Market reaction
At the time of writing, the US Dollar Index (DXY) is trading 0.15% higher on the day to trade at 99.70.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
China Producer Price Index (YoY) above expectations (-2.2%) in October: Actual (-2.1%)
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China Consumer Price Index (MoM) up to 0.2% in October from previous 0.1%
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
China Consumer Price Index (YoY) came in at 0.2%, above forecasts (0%) in October
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Dow Jones Industrial Average grapples with shaky consumer sentiment
The Dow Jones Industrial Average (DJIA) took another leg lower on Friday, testing below the 46,800 level for the first time in almost three weeks before barely managing to squeeze back to flat for the day as an AI stock pullback and withering consumer survey results drag down both sides of the investment-consumption equation. Friday would have seen the release of the latest US Nonfarm Payrolls (NFP) jobs report, but the ongoing US government shutdown, which is officially the longest shutdown in US history, is crimping the flow of official data, leaving investors to grapple with volatile private data, and putting deep question marks where key inflation and employment numbers should be.
US Senate Democrats prepared a minibus government funding solution for House Republicans to accept, which Republicans promptly rejected before headlines could even be written. Democrats were willing to suspend Affordable Care Act (ACA) healthcare provisions for an entire year in order to get the US government started back up, but Donald Trump’s Republican supporters within the US government remain unwilling to reopen federal government services unless Democrats are fully willing to allow between 15 and 40 million Americans lose access to critical healthcare coverage. Supplemental Nutrition Assistance Program benefits, also known as the SNAP program, have also been shuttered during this federal closure, marking the first time in US history that SNAP has been withdrawn during a government shutdown. SNAP provides food benefits for over 9% of American households, 80% of which contain children. Donald Trump’s administration has waffled severely on SNAP funding, stating that they will be fully, partially, or not funded depending on the day or who is asking the question.
Consumer sentiment takes a knee
University of Michigan (UoM) Consumer Sentiment survey results showed that US spenders and earners are far more bitter about worsening economic conditions than previously expected by investors. The UoM’s Consumer Sentiment Index and Consumer Expectations Index both declined to some of their lowest levels on record, with the Sentiment Index falling to 50.3 from 53.6, and the Expectations Index slumping to 49 from 50.3. The steep declines highlight the deteriorating economic outlook for consumers, who have been facing worse employment, income, and hiring conditions through the second half of the year. Markets struggled to grasp deteriorating conditions at the surface level of consumer data, with the upper ranks of income earners covering inflation and job cut holes with outsized consumption spending power in the post-COVID economic era.
The UoM’s 1-year and 5-year Consumer Inflation Expectations survey results also showed a steepening of the consumer expectations curve, with 1-year inflation expectations rising to 4.7% from 4.6% and the 5-year outlook falling to 3.6% from 3.9%. A tightening inflation expectations curve implies that consumer-level economic concerns are shifting from general malaise to growing fears of a near-term deterioration.
Fed consumer sentiment results differ, but overall message remains the same
Fears of a ‘K-shaped’ economy, where a few high-income earners are outspending the lower portions of the income ladder just enough to paper over threats of steep economic downturns, have been growing through the year among academic circles, and now K-shaped data sources have been appearing to further complicate the issue. According to the Federal Bank of New York (Fed), consumer inflation expectations were relatively unchanged in October, with the New York Fed reporting a slight decline in 1-year inflation expectations to 3.2% from 3.4% and an unchanged 5-year inflation outlook at 3.0%. Despite the comparatively cooler data, even the New York Fed had to begrudgingly acknowledge that October’s household labor market outlook was “mostly negative”, while consumer perceptions of both current and future financial conditions worsened appreciably.
Shutdowns are the president’s fault, except when they’re not
The US government shutdown continues to roll on into record territory, and US President Donald Trump has the dubious honor of helming the federal government during the two longest shutdowns in US history, and also stands tall as the US President in office for the most federal closures. With official datasets frozen due to defunding, investors have been forced to pivot into sniffing out private datasets to try and estimate where inflation and labor market shifts are hitting, and the figures are not looking good. According to figures from DataWeave, major retailers Target (TGT) and Walmart (WLMT) have seen their average prices rise 5.5% and 5.3%, respectively, a stark reminder that inflation figures tend to be a collection of assumptions, estimates, and averages, and can frequently mask steep, unbalanced price hikes that pummel a large number of lower-income consumers’ wallets.
Donald Trump’s personal solution to growing concerns about an affordability crisis was to take to social media and make a post demanding that everyone “STOP LYIN”, and instead claiming that his administration has actually “whipped” inflation. In 2013, Donald Trump was an aspiring political candidate who claimed via a social media post that “a shutdown means the president is weak.” However, that was before Donald Trump was personally at the helm of the two longest government shutdowns ever.
Dow Jones daily chart
Economic Indicator
Michigan Consumer Sentiment Index
The Michigan Consumer Sentiment Index, released on a monthly basis by the University of Michigan, is a survey gauging sentiment among consumers in the United States. The questions cover three broad areas: personal finances, business conditions and buying conditions. The data shows a picture of whether or not consumers are willing to spend money, a key factor as consumer spending is a major driver of the US economy. The University of Michigan survey has proven to be an accurate indicator of the future course of the US economy. The survey publishes a preliminary, mid-month reading and a final print at the end of the month. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Last release: Fri Nov 07, 2025 15:00 (Prel)
Frequency: Monthly
Actual: 50.3
Consensus: 53.2
Previous: 53.6
Source: University of Michigan
USD/JPY Price Forecast: Rebounds above 153.00 as buyers stepped in
The USD/JPY stages a recovery on Friday with buyers claiming 153.00, an indication that the uptrend might resume in the short term. The 100-pip or 0.68% Thursday’s loss was offset by traders buying the US Dollar due to its close correlation with the US 10-year Treasury note yield, which was steady during the trading day.
USD/JPY Price Forecast: Technical outlook
The USD/JPY technical picture shows that buyers regained momentum at around 153.00 with the next support level seen at the 20-day SMA at 152.52. Although buyers kept the exchange rate from falling to 152.80, a breach of the latter opens the door towards the 20-day SMA and on further weakness, the October 29 low lies next at 151.53.
However, buyers remain in charge as depicted by the RSI. That said, if USD/JPY rises above 154.00, the next resistance would be the November 4 peak at 154.48, followed by 155.00.
USD/JPY Price Chart – Daily
Japanese Yen Price This week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.29% | -0.22% | -0.41% | 0.11% | 0.76% | 1.70% | 0.05% | |
| EUR | 0.29% | 0.07% | -0.05% | 0.40% | 1.04% | 1.99% | 0.34% | |
| GBP | 0.22% | -0.07% | -0.28% | 0.33% | 0.97% | 1.92% | 0.27% | |
| JPY | 0.41% | 0.05% | 0.28% | 0.48% | 1.15% | 2.09% | 0.58% | |
| CAD | -0.11% | -0.40% | -0.33% | -0.48% | 0.59% | 1.57% | -0.06% | |
| AUD | -0.76% | -1.04% | -0.97% | -1.15% | -0.59% | 0.95% | -0.70% | |
| NZD | -1.70% | -1.99% | -1.92% | -2.09% | -1.57% | -0.95% | -1.62% | |
| CHF | -0.05% | -0.34% | -0.27% | -0.58% | 0.06% | 0.70% | 1.62% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
EUR/USD rises as US Dollar weakens on extended shutdown and market uncertainty
EUR/USD trimmed some of its previous losses and rises 0.16% on Friday’s late in the North American session, amid a scarce economic docket in both sides of the Atlantic. The US government shutdown extension to its 38th day and the light docket in Europe, keeps the pair trading within familiar levels around 1.1560.
Euro gains modestly as traders shun the Dollar amid US government shutdown
That lack of data in the US increased uncertainty in the financial markets, as seen by Wall Street indices, plunging due to different reasons. Alongside the government shutdown, investors seem anxious about AI related companies being overvalued, triggering a sell-off in the four major US indices.
As investors became risk averse, one should expect Greenback to being the haven, but traders opted to buy the Euro instead of the Dollar. The US Dollar Index (DXY), which tracks the performance of six currencies, dives 0.16% at 99.53.
Economic data in the US showed that consumers had grown pessimistic about the economy, revealed the University of Michigan (UoM) Consumer Sentiment poll for November. At the same time, the New York Fed revealed that inflation expectations for one year dipped, while for a medium term stood steady, revealed the October’s survey.
In Europe, the German Trade Balance showed the surplus narrowed to €15.3 billion in September, beneath the €16.8 expected, following August’s downward revised surplus of €16.9 billion.
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.29% | -0.22% | -0.41% | 0.11% | 0.76% | 1.70% | 0.05% | |
| EUR | 0.29% | 0.07% | -0.05% | 0.40% | 1.04% | 1.99% | 0.34% | |
| GBP | 0.22% | -0.07% | -0.28% | 0.33% | 0.97% | 1.92% | 0.27% | |
| JPY | 0.41% | 0.05% | 0.28% | 0.48% | 1.15% | 2.09% | 0.58% | |
| CAD | -0.11% | -0.40% | -0.33% | -0.48% | 0.59% | 1.57% | -0.06% | |
| AUD | -0.76% | -1.04% | -0.97% | -1.15% | -0.59% | 0.95% | -0.70% | |
| NZD | -1.70% | -1.99% | -1.92% | -2.09% | -1.57% | -0.95% | -1.62% | |
| CHF | -0.05% | -0.34% | -0.27% | -0.58% | 0.06% | 0.70% | 1.62% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily digest market movers: EUR/USD to remain trapped within 1.15-1.16
- US Consumer Sentiment fell sharply to 50.3 in November from 53.6 in October, reflecting weaker household confidence said the UoM. The survey showed inflation expectations for the year ahead edged higher to 4.7% from 4.6%, while the five-year outlook eased to 3.6% from 3.9%.
- The New York Fed’s Consumer Expectations Survey showed that one-year inflation expectations slipped to 3.2% in October from 3.4% in September. Expectations for both the three-year and five-year horizons were unchanged at 3.0%.
- Federal Reserve Vice Chair Philip Jefferson said the central bank should move cautiously with additional rate cuts as monetary policy approaches a neutral stance. He added that decisions will be made on a meeting-by-meeting basis and noted the “potential lack of government data due to the shutdown” as a factor warranting prudence.
- In Europe, an unexpected decline in September retail sales dampened optimism following earlier upbeat services sector data, acting as a headwind to the euro’s recovery.
EUR/USD technical outlook: To remain subdued, tilted to the downside
The EUR/USD seems poised to remain downward biased, despite sellers lacking the strength of pushing the exchange rate towards the 200-day Simple Moving Average (SMA) at 1.1344. Nevertheless, in the short term if buyers regain the 20-day SMA at 1.1592 and 1.1600, then look for a recovery towards 1.1700.
Although buyers are gathering momentum as shown by the RSI, as long as the index is bearish, sellers have the upper hand. Hence, if EUR/USD drops below 1.1500, expect a test of the August 1 cycle low of 1.1391.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.
The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.
Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.
A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.
Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Gold tops $4,000 as US shutdown, weak data stoke haven demand
Gold price (XAU/USD) advances during the North American session on Friday, up 0.64% as the US government shutdown extends, while risk aversion keeps US equity markets poised for weekly losses. At the time of writing, Bullion trades at $4,002 after bouncing off daily lows of $3,974.
Bullion gains 0.64% amid risk aversion and growing bets for a December Fed rate cut
Uncertainty continues to surround the US economy, as shown by the University of Michigan preliminary Consumer Sentiment for November. The index reached its lowest level since June 2022 amid the COVID emergency, showing that households are expressing worries “about potential negative consequences for the economy” of the US government shutdown.
Consequently, Gold, which is usually sought as a hedge to uncertainty and lower interest rate environments, clung to its gains, up so far 0.13% in the week.
Meanwhile, the US job market might be slowing more sharply than expected, as the Challenger report prepared by Gray & Christmas showed on Thursday that employers fired over 150,000 people in October, the largest reduction for the month in more than 20 years.
Market participants see a 68% chance of a rate cut by the Federal Reserve (Fed) at the December meeting, according to data by the Prime Market Terminal interest rate probability tool.
Daily market movers: Gold advances amid steady US Treasury yields
- The US Dollar Index (DXY), which tracks the performance of the American currency against other six, slides 0.15%, down to 99.55.
- US Treasury yields with the 10-year Treasury note yield stabilized, following Thursday’s seven-and-a-half basis points plunge, and hovers at around 4.085%, unchanged. US real yields — which correlate inversely to Gold prices — climb nearly two basis points to 1.805%.
- The US government shutdown began its thirty-eighth day, and the chances of a reopening seem far even though the Republican Senate Leader John Thune has proposed a vote later Friday on a new continuing resolution to reopen the government through January.
- The White House Economic Adviser Kevin Hassett told CNN that the shutdown is hurting the economy more than they expected, anticipating a reduction of 1 to 1.5% in GDP growth this quarter.
- The New York Fed Consumer Survey showed that inflation expectations for one year in October dipped from 3.4% to 3.2%. For a three and five-year period, they remained unchanged at 3% each.
- The University of Michigan revealed that Consumer Sentiment in November plunged to 50.3 from 53.6 in October. The survey updated households’ inflation expectations. For a one-year period, it rose to 4.7% from 4.6%, and for a five-year period, dipped from 3.9% to 3.6%.
- Fed Vice Chair Philip Jeffferson said that “The Fed should proceed slowly with further rate cuts as policy approaches the neutral rate.” He commented that his approach would be meeting by meeting and cited “a potential lack of government data due to the shutdown.”
- Data from the World Gold Council (WGC) revealed that Gold ETFs recorded inflows of 54.9 tonnes in October, led by strong demand from North America (+47.2 tonnes) and Asia (+44.8 tonnes), while Europe saw outflows of 37.4 tonnes.
Technical outlook: Gold price climbs towards $4,000
Gold’s technical picture remains bullish, though bulls must achieve a daily close above $4,000 to remain hopeful of higher prices. Bullish momentum is increasing as depicted by the RSI.
If XAU/USD climbs above $4,000, bulls could target the 20-day Simple Moving Average (SMA) at $4,082. A breach of the latter will expose $4,100. Conversely, a drop below $4,000 would expose the $3,950, followed by the October 28 low of $3,886.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.