Gold News: Hot ADP Print May Push Gold Toward $3846.50–$3720.25 Fib Retracement Zone
News Summary
Gold (XAU/USD) recorded its sharpest weekly loss since early October, settling at $4002.81, down 2.71%, primarily due to rising U.S. yields, a stronger dollar, and renewed skepticism over further Fed easing, which heavily weighed on investor appetite for non-yielding assets. The market initially fully priced in another rate cut by year-end, but this changed after the Federal Reserve's policy announcement. While the Fed delivered a 25 bp cut as expected, Chair Jerome Powell made it clear that further easing is not guaranteed, citing growing division among policymakers. Odds for a December cut dropped from 91.1% to 63%. Additional pressure came from a breakout in the U.S. Dollar Index, which closed at a three-month high and may push higher, making gold more expensive for international buyers. Rising 10-year Treasury yields also added to the bearish tone, diminishing gold's interest rate appeal. Furthermore, improved risk appetite followed President Trump's trade remarks, signaling potential de-escalation with China via tariff rollbacks for rare earths and fentanyl enforcement, pulling flows away from defensive assets. Gold briefly tested a support zone near $3886.46 before rebounding to $4002.81, suggesting some buyer engagement around the $3846.50–$3720.25 Fibonacci retracement zone. The market is now keenly awaiting Wednesday’s ADP National Employment Report and Friday’s University of Michigan Sentiment Index. A soft reading could revive December cut odds and firm up support, while strong data or a sustained dollar rally could lead to deeper tests of $3720.25 or even $3500.20.
Background
The Federal Reserve recently delivered a 25 basis point interest rate cut, a move largely anticipated by markets. However, subsequent hawkish commentary from Chair Jerome Powell and other Fed officials has introduced uncertainty regarding the pace of future monetary easing, shifting market expectations for further cuts. This policy stance is influenced by persistent inflation concerns despite some signs of economic moderation. In the broader economic landscape of 2025, the U.S. economy is navigating a period of careful monetary policy adjustments under the Trump administration. During such times, a strengthening dollar and rising U.S. Treasury yields tend to put pressure on non-yielding assets like gold, as they increase the opportunity cost of holding gold and make dollar-denominated gold more expensive for international buyers. Additionally, improving risk sentiment, such as signs of easing trade tensions, typically dampens demand for safe-haven assets like gold.
In-Depth AI Insights
Does the Fed's management of rate cut expectations signal a deeper policy pivot rather than merely a communication strategy? The cautious statements from Fed Chair Powell immediately after a rate cut, coupled with Cleveland Fed's Beth Hammack's direct dissent, suggest significant internal division within the Fed on the monetary policy path. This might be more than just managing market expectations; it could indicate a potential shift in policy philosophy: the Fed might be moving from a