Gold slips from three-week highs as Dollar firms and Fed caution weighs

• Gold eases from three-week highs as momentum fades amid mixed market sentiment.
• US Dollar stabilizes after Fed officials signal caution on further monetary easing.
• Technically, sustained weakness below $4,150 would raise the risk of a slide toward $4,050.

Gold (XAUUSD) edges lower on Friday as bulls struggle to hold early gains amid mixed market sentiment. At the time of writing, XAU/USD is trading around $4,133, easing after reaching over three-week highs of $4,245 on Thursday.

Relief over the end of the US government shutdown has eased some of Gold's safe-haven appeal. At the same time, a run of cautious remarks from Federal Reserve (Fed) officials has prompted traders to dial back expectations of a December rate cut. The fading prospect of near-term easing is helping the US Dollar (USD) recover after recent weakness, adding pressure on the non-yielding metal.

Traders now await the release of the delayed US economic data to gain a clearer picture of the Fed's monetary policy outlook. Meanwhile, renewed concerns over stretched AI valuations are weighing on global equity markets, tempering risk appetite and could help limit Gold's downside as the metal heads for a weekly gain.

Market movers: Greenback recovers as Fed officials push back on December rate cut

• The US Dollar Index (DXY), which measures the Greenback's value against a basket of six major currencies, is staging a modest rebound from two-week lows, trading around 99.37, up nearly 0.20% on the day.
• Markets welcomed the reopening of the US government, but the short-lived funding arrangement has not eased deeper concerns, as the temporary bill only restores federal operations through January 30, 2026, while extending funding for select departments until September 30, 2026. With another shutdown risk looming just weeks away, overall sentiment remains fragile.
• On the release of delayed economic data, White House Senior Adviser Kevin Hassett told Fox News on Thursday that the September nonfarm payrolls report could be published next week. For the October jobs report, he said, "We're going to get half the employment report. We'll get the jobs part, but we won't get the unemployment rate."
• Fed officials struck a cautious tone on Thursday, signaling no urgency to cut rates. San Francisco Fed President Mary Daly said it is "premature to say definitely a cut or no cut in December," noting that the labor market "has slowed quite a bit" and inflation is easing but "still stubborn." Boston Fed President Susan Collins echoed a similar stance, saying there is a "relatively high bar for additional easing in the near term," warning that further policy support "runs the risk of slowing or stalling inflation's return to 2%."
• St. Louis Fed President Alberto Musalem said, "We need to proceed and tread with caution, because I think there's limited room for further easing." Minneapolis Fed President Neel Kashkari added that he opposed the October cut and has not made up his mind about December.
• According to the CME FedWatch Tool, markets now price a 49% probability of a December rate cut, sharply lower from 94% a month ago. According to the CME FedWatch Tool, markets now price a 49% probability of a December rate cut, sharply lower from 94% a month ago. Traders will parse upcoming Fed speeches later today, which could shape rate expectations further.

Technical analysis: XAU/USD drifts lower after rejection at $4,250

XAU/USD loses momentum after rising sharply earlier in the week following a breakout from its previous consolidation zone. The rally stalled in the $4,200-$4,250 resistance band, where sellers have re-emerged and taken near-term control.

On the downside, the $4,100-$4,080 region forms an immediate support zone, and a sustained move below this area opens the risk of a slide toward $4,050, which closely aligns with the 100-period Simple Moving Average (SMA) near $4,045, providing a strong technical floor.

On the upside, a decisive break above $4,250 is needed to revive bullish momentum and expose the all-time high zone around $4,318 as the next upside target.

Momentum signals are cooling, with the Relative Strength Index (RSI) easing back toward 52, suggesting buyers are losing some strength after the recent surge.