HG MARKETS:

Gold (XAU/USD) holds modest intraday gains during the first half of the European session, trading just below its nearly three-week high reached on Tuesday. Ongoing concerns over the potential economic fallout from the longest-ever US government shutdown continue to drive demand for the safe-haven metal. Additionally, growing expectations for another rate cut by the US Federal Reserve (Fed) in December further support gold prices.

A breakthrough toward reopening the US government has lifted overall market sentiment, providing additional optimism. However, renewed US Dollar (USD) buying is preventing traders from placing aggressive bullish bets on gold amid relatively light trading activity, as US markets remain closed for the Veterans Day holiday. Still, dovish Fed expectations could cap USD strength, suggesting that gold’s bias remains tilted to the upside.

The Senate reached a late-Sunday compromise aimed at ending the historic US government shutdown that began on October 1. Investors are now awaiting the release of delayed economic data to assess the broader impact of the shutdown on growth. Concerns over economic stability continue to fuel safe-haven demand for gold.

Adding to this, the University of Michigan’s latest survey revealed that US Consumer Sentiment dropped sharply to 50.3 in November—its lowest level since June 2022—from 53.6 in October. This decline in confidence reinforces expectations of a more accommodative stance from the Fed, keeping the non-yielding metal supported.

According to the CME FedWatch Tool, markets are pricing in more than a 60% chance of a Fed rate cut in December. This outlook has limited the USD’s upside potential and favors gold bulls. With US banks closed on Tuesday, the focus will shift to upcoming speeches from key FOMC officials on Wednesday for further guidance on the Fed’s policy path, which could offer fresh direction to gold prices.