Gold gains as risk-off mood deepens; traders await Fed Minutes

LONDON (November 19) Gold (XAU/USD) edges higher on Wednesday as a risk-off tone across global markets revives safe-haven demand. At the time of writing, XAU/USD is trading around $4,115, up nearly 1%, extending its rebound after briefly slipping below the $4,000 threshold on Tuesday.

Global equities remain under pressure amid unease over stretched tech valuations, keeping investors on the defensive. Sentiment is also cautious ahead of the Federal Open Market Committee (FOMC) Meeting Minutes due later in the day, with markets bracing for the delayed September Nonfarm Payrolls (NFP) report, scheduled for Thursday. In turn, the risk-averse environment is helping the metal maintain upward traction.

However, growing skepticism among Federal Reserve (Fed) officials about delivering another interest-rate cut in December is clouding the monetary policy outlook. As officials remain split between lingering inflation risks and signs of labour-market weakness, traders are scaling back expectations for further easing, which could cap gains in Gold.

Market movers: Markets eye Fed Minutes and NFP

• The October FOMC Meeting Minutes, due at 18:00 GMT on Wednesday, will be closely watched for insight into last month’s 25 basis point (bps) rate cut that brought the target range to 3.75%-4.00%, with traders looking for clarity after Fed Chair Jerome Powell signalled that a December cut is “not a foregone conclusion. The release is likely to be a key driver for markets as investors look for signs of whether the Committee sees room for additional easing this year.
• Soft US labour data added to the cautious mood, Tuesday’s ADP report showed US private payrolls falling by an average of 2,500 per week in the four weeks to November 1, following an 11.25K decline in the prior period. The Labor Department also resumed releasing the backlog of weekly Jobless Claims, with initial claims at 232K and continuing claims rising to 1.957 million for the week ending October 18, the highest since early August. The data reinforced signs of a cooling labour market.
• According to the CME FedWatch Tool, markets are assigning a 46.6% probability of a December rate cut, down from 62.9% a week ago. Attention is firmly on Thursday’s September Nonfarm Payrolls (NFP) report, with economists expecting payrolls to rise by around 50K, up from the 22K increase seen in August. A softer-than-expected reading could quickly reshape market expectations for further easing.
• US President Donald Trump said on Tuesday that his administration has begun interviews for the next Federal Reserve chair, adding that he expects to make a decision before year-end. The shortlist includes Kevin Hassett, Kevin Warsh, Christopher Waller, Michelle Bowman and Rick Rieder.

FXStreet