By Frank Walbaum, Market Analyst at Naga
Gold edged slightly higher above USD 4,000 per ounce on Monday, stabilizing after a period of selling pressures. Gold benefited from the Federal Reserve’s rate cut but could come under pressure as markets consider Powell’s comments. The Fed Chair suggested that further easing in December was not guaranteed. Markets now price in roughly a 70% probability of another reduction, down from more than 90% before his comments.
This week’s key data releases, including the ISM manufacturing and services PMIs and the ADP employment report, could shape expectations ahead of the next FOMC decision. Any signs of an economic downturn and fragile labour conditions could raise expectations of a dovish monetary policy into 2026 and benefit the precious metal. Conversely, resilient data could benefit US treasury yields and weigh on gold.
On the geopolitical front, the trade truce reached last week between Presidents Donald Trump and Xi Jinping pressured safe-haven assets. Nevertheless, tensions persisted elsewhere. Sporadic clashes in the Middle East and renewed confrontation across Eastern Europe continue to fuel safe-haven demand, ensuring gold remains supported, limiting downside risks.