Dollar Strength and Fed Rate-Cut Outlook Weigh on Gold's Performance

The recent performance of gold has been constrained by a strengthening US dollar and diminishing expectations of a Federal Reserve rate cut in December. On November 17, spot gold opened below its three-week high reached the previous week, trading near $4,075 as dollar gains and reduced market appetite for Fed easing limited upward momentum . This follows a period of delayed economic data releases due to a recent US government shutdown, with key reports like the September nonfarm payrolls rescheduled for November 20 .

The Federal Reserve's cautious stance remains a critical factor influencing gold markets. While Vice Chair Philip Jefferson delivered slightly dovish remarks on November 17, emphasizing rising risks in the labor market and a gradual cooling of employment conditions, his comments contrasted with earlier hawkish statements from other Fed officials . This divergence has led to a sharp decline in market expectations for a December rate cut. According to the CME FedWatch Tool, the probability of a December cut has fallen from 94% a month earlier to 44% .

Gold's technical outlook reflects this uncertainty. The 4-hour chart shows the 100-period simple moving average (SMA) at around $4,043 acting as a key support level, coinciding with the upper boundary of a prior consolidation range . A break below $4,040-4,050 could trigger a retest of the $3,900 level, particularly if the psychological $4,000 threshold fails to hold. On the upside, initial resistance is seen at $4,100, with a stronger barrier at the 21-period SMA of $4,150. A sustained breakout above this range could push prices toward $4,250, but current momentum remains weak, with the relative strength index (RSI) hovering near 41, indicating short-term dominance of sellers .

The broader market context includes reduced geopolitical and trade-related risks, which have diminished gold's traditional safe-haven appeal. The end of the US government shutdown and easing global trade tensions have contributed to this shift . However, persistent economic uncertainties, including unresolved data gaps from the shutdown, maintain a cautiously bullish long-term outlook for gold. For instance, the Bureau of Labor Statistics acknowledged incomplete data collection for October's CPI report, casting doubt on the report's eventual release .

The Fed's policy trajectory remains clouded by data delays. Jefferson noted that policymakers must "be careful" as interest rates approach neutral levels, while the availability of pre-meeting data remains uncertain . This ambiguity is likely to keep gold in a range-bound pattern, with downward pressure tempered by the Fed's inflation-focused approach.