Gold prices surged to a two-week peak on Monday, driven by increased hopes for a Federal Reserve rate cut following weak US economic data. A softer US dollar further bolstered this trend.
According to Reuters, spot gold rose 2.1% to $4,082.17 per ounce by 1138 GMT, reaching its highest since October 27. US gold futures for December delivery increased by 2% to $4,090.50 per ounce. The dollar index dropped 0.1%, making gold more attractive to international buyers.
Analysts highlight that this movement reflects renewed investor caution amid ongoing uncertainty over US fiscal negotiations and delayed economic reports.
Recent US PMI numbers fell below 50, indicating contraction in key sectors and raising concerns about slowing growth. Concurrently, the US dollar index dipped 0.1%, reducing pressure on dollar-tied assets and supporting gold. “These factors combined to enhance gold’s appeal as a defensive hedge against economic weakness and policy uncertainty,” said Mohanad Yakout, senior markets analyst at Scope Markets.
Market sentiment remains alert to developments in US government shutdown resolution talks, which continue to influence short-term risk appetite. Extended delays in key data releases due to the political deadlock have further obscured the economic outlook, maintaining elevated volatility across major asset classes. “Investors seem to be positioning cautiously, favoring gold as a store of value amid mixed macro signals,” Yakout added.
Due to the government shutdown, official data releases were halted, prompting investors to rely on private reports for guidance. These reports indicated a softening labor market in October and weaker consumer sentiment. The University of Michigan’s index was 50.3, below the expected 53.2, enhancing gold’s status as a safe-haven asset. The Senate’s initial approval to reopen the government could allow key economic data releases to resume once the House passes the bill, crucial for assessing the economic health. Although reopening might pressure gold, the possibility of a December rate cut could continue to support prices. “Technically, gold is trading above its 9-day SMA, showing positive momentum. It broke out of the $3,925 to $4,046 range, indicating further upside potential. It’s now testing the 21-day SMA at $4,074, and a breakthrough could lead toward $4,124. The RSI increased from 51 to 54, with support around $3,925,” noted Vijay Valecha, Chief Investment Officer at Century Financial.
From a technical standpoint, the $4,000 level is a crucial psychological and structural support. “Sustained action above this level has encouraged a short-term retracement higher, with momentum indicators suggesting ongoing buying interest while overbought conditions remain limited. Immediate resistance is near $4,100–$4,120, where profit-taking might briefly limit upward momentum before any potential extension,” Yakout concluded.
Overall, gold’s latest rally reflects a blend of macro-driven risk aversion and technical strength. “As markets await clarity on US fiscal developments and broader economic direction, gold is poised to benefit from its dual role as a hedge against uncertainty and a tactical trade in a volatile environment,” Yakout stated.
