• Gold remains firm with modest daily gains ahead of key events.
• Mixed signals from the US jobs market lend support to the metal.
• FOMC minutes and NFP data could provide directional bias to the gold.

The gold price holds modest gains on Wednesday. Still, it remains capped by the key $4,100 level as traders weigh a firmer dollar amid shifting expectations for Fed rate cuts and a wave of delayed US macroeconomic data.

The Dollar Index (DXY) remains around 99.60 during the earlier European session after climbing for three consecutive sessions amid fading expectations for a December rate cut. Fed officials have recently left uncertain remarks regarding monetary policy, as the price pressures remain unclear, whether they are on track towards 2% or not.

Meanwhile, the labor market signals remain mixed ahead of Thursday’s US NFP data for September. The initial jobless claims data came in at 23k, while ADP data showed around 2,500 job reductions per week on average during late October and early November. Continuing claims reached 1.957 million, reinforcing concerns of fading hiring momentum. Hence, traders are cautious to take prominent positions on gold ahead of key data and FOMC meeting minutes later today.

Political noise also complicates the scenario, as President Trump has stated that he would like to remove Fed Chair Powell immediately and has already shortlisted a potential successor. Markets largely ignored the remarks but maintained high expectations for volatility.

Aside from the macro headlines, shelter inflation has resurfaced as a complicating factor for the Fed. According to Standard Chartered economists, out-of-pocket shelter inflation stays at historic highs despite easing CPI-measured shelter costs. Homeowners face elevated housing expenses and mortgage rates due to pandemic-led price gains. This further confuses the Fed’s rate cut trajectory.

XAU/USD remains highly sensitive to the rate expectations. As Fed officials have adopted a more data-dependent approach, traders are cautious about pushing gold beyond the $4,100 level. The price remains in a tight structure with buyers defending the $4,000 level. A dovish FOMC or softer jobs data could push the gold towards fresh weekly highs. On the contrary, a hawkish shift in tone or upbeat NFP numbers could lead gold to the downside.

Gold Price Technical Analysis: Bullish Above Trendline Support
 

(Click on image to enlarge)

Gold Price 4-hour Chart
 

The gold’s 4-hour chart shows a mildly positive picture, supported by a rising trendline. However, the price stuck within the clusters of key MAs reflects a limited volatility in the market. Moreover, the RSI near 50.0 also shows a neutral bias, awaiting catalysts to trigger the breakout on either side.

A bullish breakout could lead the price to test the upper trendline near $4,200, while a downside breakout could lead to $4,000 level. The near-term challenge for the metal is to find acceptance above the $4,100 area. Meanwhile, dip-buying interest around $4,000 to $4,050 zone remains intact.

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