Gold remains capped below $4200 resistance
Gold (XAU/USD) rebounded slightly from daily lows on Friday’s European session, trading with a mild positive bias but still failing to break above the $4,200 mark. A growing number of Federal Reserve policymakers signaled caution on further easing in the absence of fresh economic data, prompting traders to trim expectations for a December rate cut. This has acted as a headwind for the non-yielding yellow metal.
Investors had hoped that weakening economic momentum—partly linked to the prolonged United States government shutdown—would push the Federal Reserve toward further easing. However, the lack of key data releases has left policymakers hesitant. Minneapolis Fed President Neel Kashkari noted that the outlook remains mixed as inflation runs higher, while Boston Fed President Susan Collins said she would be reluctant to ease policy further without reliable inflation figures.
Despite reduced rate cut bets, the US Dollar (USD) has struggled to recover from a two-week low. Concerns over fiscal outlook and delayed macroeconomic data continue to weigh on the currency, indirectly supporting gold prices. Economists estimate that the government closure may have already shaved 1.5–2.0% off quarterly GDP growth, adding to worries about labor market deterioration.
According to CME Group’s FedWatch Tool, traders still price in a 50% chance of a 25 basis point cut in December, while the probability of a January reduction stands above 75%. This outlook favors gold bulls, though momentum remains limited until clearer signals emerge from the Federal Reserve.
Gold’s breakout above $4,150 earlier this week and its attempt to hold above $4,200 were seen as bullish triggers. Oscillators on daily and 4-hour charts show positive traction, suggesting the path of least resistance is upward. Resistance lies near $4,245, with potential to reclaim $4,300 if broken. On the downside, support at $4,145 protects immediate losses, while a break below could expose $4,100 and $4,075, with $4,000 as a pivotal psychological level.
Conclusion:Gold remains capped below $4,200 as traders weigh reduced Fed rate cut bets against ongoing economic concerns in the United States. While the USD struggles to recover, safe-haven demand and technical signals suggest gold could still aim higher, though caution dominates positioning.