Gold retreats slightly as US Dollar rebounds

LONDON (December 17) Gold (XAU/USD) trades with a mild positive bias on Wednesday but struggles to build on early gains, as a rebound in the US Dollar (USD) caps upside momentum. At the time of writing, XAU/USD is trading around $4,315, easing back after briefly touching $4,342 during the early European session.

Despite the range-bound price action seen so far this week, the broader bias for the yellow metal remains constructive, as a dovish Federal Reserve outlook and persistent geopolitical risks help limit downside attempts.

Market expectations continue to tilt toward further monetary easing by the Federal Reserve (Fed) in 2026 after Tuesday’s delayed US jobs data reinforced concerns about a cooling labour market, with attention now turning to Thursday’s Consumer Price Index (CPI) report.

The US economic calendar is relatively light on Wednesday, investors will parse comments from key FOMC members for additional clues on the Fed’s monetary policy path next year.

Market movers: US jobs data reinforce Fed easing expectations; geopolitical risks resurface

• The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is trading around 98.50, extending its rebound after briefly slipping below 98.00 on Tuesday, its lowest level since October 3.
• Data from the US Bureau of Labor Statistics (BLS) showed that the US economy added 64,000 jobs in November, slightly above market expectations for a 50,000 increase, after payrolls fell by 105,000 in October due to the government shutdown. Meanwhile, the Unemployment Rate rose to 4.6%, above expectations of 4.4%, marking its highest level since September 2021.
• The report also showed that US payrolls were revised down by a combined 33,000 over August and September, echoing remarks from Fed Chair Jerome Powell, who warned at last week’s post-meeting press conference that job gains since April may have been overstated by around 60,000.
• Overall, the employment data suggest that the US labour market continues to cool. While November’s payroll gain came in slightly better than expected, the broader picture remains soft, with slower job creation, rising unemployment and easing wage growth. The data reinforce expectations that the Fed has room to ease policy, with markets currently pricing in two rate cuts next year.
• Geopolitical tensions are back in focus after earlier optimism around progress in US-led Russia-Ukraine peace talks was overshadowed by fresh developments, with reports that US President Donald Trump ordered a blockade of sanctioned Oil tankers entering and leaving Venezuela.

FXStreet