Gold prices edged lower on Wednesday, slipping from recent highs as investors assessed weaker United States labour data and awaited signs of a government reopening that could influence Federal Reserve policy expectations.
By 3:45 pm AEDT (4:45 am GMT), spot gold was down 0.5% at US$4,107.56 per ounce, retreating after three consecutive sessions of gains that had pushed the metal near the key US$4,150 level.
The yellow metal’s recent rally was fuelled by optimism over a potential end to the record-long U.S. government shutdown, which spurred broad-based buying across markets.
Risk appetite remained broadly positive as investors grew more confident that policymakers were nearing an agreement to restore government funding. Persistent weakness in U.S. economic data, meanwhile, continued to reinforce expectations of deeper Federal Reserve rate cuts in the months ahead.
The latest ADP employment data released on Tuesday showed that U.S. firms shed more than 11,000 jobs a week through late October.
According to the CME Group FedWatch Tool, markets now price in around a 65.4% probability of a December rate cut, up from 62% before the report’s release.
Asian markets extended gains on the dovish shift in Fed expectations, while U.S. Treasury yields declined, helping to cushion some of gold’s losses.
Still, the greenback’s limited rebound has capped the metal’s advance near its recent peaks.
Meanwhile, markets are looking towards the resumption of key U.S. economic data releases, which could offer more clarity on the Fed’s policy trajectory.
