Gold seeks fresh catalyst

• Gold kicks off November wobbling around $4000
• US-China truce, Fed hawks and USD strength weigh on metal
• US political risk and private data could spark volatility
• Bloomberg FX model - 71.4% - ($3880.96 - $4131.74) over one-week
• Technical levels - $4050 and $4000

Gold is down almost 10% from its all-time high at $4381.52.

WHY?

• US-China trade truce: Both sides have stabilized relations for now. The US has agreed to suspend Trump’s reciprocal tariffs for another year and halt plans to slap 100% tariffs on Chinese exports. This development boosted market sentiment, cooling appetite for safe-haven assets.

•  Fed’s hawkish rate cut: The Fed cut interest rates as widely expected last week BUT Powell attempted to cool expectations of looser monetary policy. Traders are now pricing in a 68% chance of a Fed cut in December.

• Stabilizing dollar: USD regained some of its mojo as traders trimmed bets around lower US interest rates. The dollar appreciated against every single G10 currency in October with FXTM’s USDInd approaching the psychological 100.00 level.

WHAT COULD MOVE XAUUSD THIS WEEK?

The precious metal slightly weakened this morning following China’s end of tax rebate for some retailers – a move seen dampening demand in one of the world’s largest markets.

Gold may be rattled by US political risks with the government shutdown on the verge of becoming the longest in US history.

Global trade developments, Fed speeches and private data may also add to the potential volatility.

Note: US government economic data releases may be delayed by shutdown that began on Oct. 1.

Monday 3rd November

• S&P Global US Manufacturing PMI – (14:45 PM GMT)

XAUUSD is forecasted to move 0.5% up or 0.4% down in a 6-hour window after the S&P Global US Manufacturing PMI

• US ISM Manufacturing – (15:00 PM GMT)

XAUUSD is forecasted to move 0.6% up or 0.5% down in a 6-hour window after the US ISM Manufacturing

Wednesday 5th November

• ADP Employment Change – (13:15PM GMT)

XAUUSD is forecasted to move 0.7% up or 0.5% down in a 6-hour window after the ADP employment change

Friday 7th November

University of Michigan Sentiment – (15:00 PM GMT)

XAUUSD is forecasted to move 0.5% up or 0.2% down in a 6-hour window after the University of Michigan Sentiment

POTENTIAL SCENARIOS:

BULLISH – Should prices break above $4050; bulls may target the 21-day SMA and $4131.74 - the upper limit of Bloomberg’s FX model.

BEARISH – Weakness below $4000 could see prices decline toward $3915 and $3880.96 the lower limit of Bloomberg’s FX model.