Gold Forecast: Declines Amid Dollar Recovery, Shutdown Deal

Gold forecast shows a slight bearish bias amid renewed investor confidence and optimism around the US shutdown.
The non-yielding gold remains supported by expectations of Fed easing and US economic worries.
Traders await commentary from FOMC officials for further impetus regarding Fed easing.

Gold forecast shows a short-term bearish pullback, as it trades near $4,115 on Wednesday, snapping its 3-week rally amid a strengthened greenback. The expectations of the US government reopening have lifted the risk-on mood, weighing on the yellow metal.

Markets are pricing in a 68% probability of a 25 bps December cut. However, some market participants are expecting a 50 bps cut instead. The Fed’s dovish expectations have suppressed the yields, supporting non-yielding assets such as gold.

However, the US dollar faces a modest recovery due to the optimism around the end of the federal shutdown that boosted investor confidence and appetite for risk assets. This risk-on tone caps gold’s further upside in the near term.

Markets maintain a cautious stance over speculations that the shutdown could have weakened the US economy, pressuring the Fed to deliver a December rate cut. Recent data from Revelio Labs revealed a loss of more than 9,000 private jobs in October. Moreover, a decline of 22,000 government payrolls and a rise in unemployment reignite the Fed’s dovish stance.

While today’s lows reflect reduced safe-haven demand for gold and a limited dollar strength, the ongoing US economic decline and Fed cuts support gold in the medium term.

Gold Daily Key Events

The significant events in the day include:

FOMC Member Williams Speaks
FOMC Member Paulson Speaks
FOMC Member Bostic Speaks
FOMC Member Miran Speaks
FOMC Member Waller Speaks

On Wednesday, traders look ahead to speeches from FOMC officials Williams, Paulson, Miran, Waller, and Bostic for insights into further rate-cut bets. However, major event for the week remains US CPI due tomorrow.

Gold Technical Forecast: Consolidating Pullback Near $4,115

(Click on image to enlarge)

Gold Technical Forecast

Gold 4-hour chart

Gold’s 4-hour chart shows a consolidation above $4,100 after breaking its 3-week rally. The 20-, 50- and 100-period MAs remain below the price, suggesting a firm broader trend.

The RSI holds near 60.0, indicating the momentum eases without a clear sign of trend reversal. If buyers break above $4,155, they could aim for $4,190 and $4,275, continuing the further uptrend. On the contrary, a failure to hold above $4,100 could invite deeper pullbacks.