Gold retreats toward weekly lows as Fed cut odds shrink

• Gold weakens on Friday as fading hopes of a December Fed rate cut keep buyers sidelined.
• Mixed US labour data reinforces expectations that policymakers may remain cautious next month.
• Technical bias stays negative, with XAU/USD trading below key SMAs and testing a key trendline support on the 4-hour chart.

Gold (XAU/USD) trades on the back foot on Friday, weighed down by fading hopes of a December interest rate cut from the Federal Reserve (Fed). At the time of writing, XAU/USD is trading around $4,035, down nearly 1.0% on the day, as the metal continues to oscillate within the range established earlier this week.

Markets had already been dialing back expectations for a December rate cut, with most Fed officials striking a noticeably cautious tone in recent weeks. Policymakers have repeatedly warned that inflation remains sticky and that the labour market, while cooling, is still resilient enough to justify a more patient approach.

Meanwhile, the delayed US labour data released on Thursday, which showed stronger headline payrolls alongside higher unemployment and softer wage growth, did little to shift the Fed's monetary policy outlook.

Against this backdrop, markets now see only a one-in-three chance of a December rate cut. Higher-for-longer interest rates typically curb demand for non-yielding assets such as Gold, while a firmer US Dollar (USD) continues to act as an additional headwind for the metal.

Market movers: Traders weigh mixed labour data and cautious signals from the Fed

• September Nonfarm Payrolls (NFP) rose by 119,000, well above the 50,000 forecast. Markets also focused on the sizeable downward revision to August, which was changed to a 4,000 decline from the previously reported 22,000 gain. The Unemployment Rate climbed to 4.4%, up from 4.3% in August, exceeding expectations for 4.3% and marking its highest level since October 2021.
• This was the first official US employment report in weeks following delays caused by the government shutdown. It is also the last payroll release before the Fed’s December 9-10 meeting, following the Bureau of Labor Statistics' (BLS) confirmation on Wednesday that the October data will be published together with the November report on December 16.
• Philadelphia Fed President Anna Paulson said on Friday she is approaching the December policy decision cautiously. She described the September labour market report as “encouraging on balance” but noted she remains more concerned about employment than inflation at the margin. Paulson added that the rate cuts delivered so far have been appropriate, though each one “raises the bar” for further easing. With upside risks to inflation and downside risks to employment, she said monetary policy must “walk a fine line.”
• The US economic calendar features the S&P Global flash PMIs for November later on Friday, followed by the University of Michigan Consumer Sentiment Index. Attention will also turn to a heavy Fed speakers’ lineup, including New York Fed President John Williams, Fed Governor Michael Barr, Fed Vice Chair Philip Jefferson, and Dallas Fed President Lorie Logan.
• According to a Reuters report, Swiss gold exports fell 11% in October, with shipments to China plunging 93% to just 2.1 tons, the lowest since February. Chinese dealers were offering discounts of $48–$60 per ounce in early October, signalling weak physical demand in the world’s largest consumer market. Exports to the UK also dropped sharply, sliding 69% from the previous month.

Technical analysis: XAU/USD holds below key SMAs as sellers retain control

On the 4-hour chart, XAU/USD remains under pressure, with price trading below both the 50-period and 100-period Simple Moving Averages (SMAs), keeping the near-term tone tilted toward sellers. The 50-period SMA around $4,105.62 has begun to roll over, signalling weakening bullish momentum, while it still sits just above the gently rising 100-period SMA near $4,058.39.

Price is also hovering near the lower boundary of a broad symmetrical triangle, with the ascending trendline containing price action throughout November. A sustained break below this trendline could open the door toward the $4,000 psychological level, followed by the October 28 low near $3,886.

On the upside, the $4,100-$4,150 region remains a firm ceiling, with bulls struggling to secure a breakout above it. Momentum remains soft, with the Relative Strength Index (14) at 42.46, holding below the 50 midline and indicating a lack of bullish impulse.