Gold plunges below $4,100 as hawkish Fed rhetoric trims December rate-cut bets

• Gold dips to $4,032 before slight rebound, trading below $4,100 as December cut odds drop to 50%.
• Fed officials, including Schmid, warn inflation remains 'too hot,' fueling pause speculation in easing cycle.
• Markets await delayed US data, hoping weaker indicators justify further Fed accommodation.

Gold (XAU/USD) tumbles near 2% on Friday yet it has recovered after reaching a daily low of $4,032 on growing speculation that the Federal Reserve might pause its easing cycle as most officials struck a hawkish message.

Bullion prices fell during the day sharply but at the time of writing, XAU/USD trades beneath $4,100 down 1.72%.

XAU/USD slides nearly 2% as policymakers push back on easing expectations and traders reassess odds of a December cut

Money markets trimmed their bets for the December meeting from 72% a week ago to about a 50% chance, with most officials worried about inflation, despite acknowledging the labor market softness.

Kansas City Fed Jeffrey Schmid said, "inflation is too hot" and added that policy is where it should be. In the last meeting he was one of the two dissenters, with Fed Governor Miran eyeing 50 bps of cuts, Schmid opted to hold rates unchanged.

Even though the largest government shutdown should get economic data flowing, the Bureau of Labor Statistics (BLS) has not released a statement of tentative dates of data releases. In its website is read that they "will announce revised news release dates on this page as they become available."

Traders remain hopeful that fresh data would indicate that further easing is needed due to the deterioration of the US economy.

As of writing, US Treasury yields are edging up, while Greenback trims some of its Thursday's losses that pushed the US Dollar Index (DXY) far from 100.00, reaching a weekly low of 98.99.

Daily market movers: Gold tumbles on traders booking profits, elevated yields

• The US Dollar Index (DXY), which tracks the performance of the buck's value against other six currencies, rose a modest 0.08% at 99.31 as of writing.
• Conversely, US Treasury yields are rising, with the 10-year US Treasury note up two and a half basis points to 4.10%. US real yields -- which correlate inversely to Gold prices, also surging nearly three bps to 1.862%.
• Fed Governor Stephen Miran insisted on his uber dovish rhetoric, saying that the data should make the Fed more dovish, not less and added that it is a mistake to make policy on past data.
• Kansas City Fed Jeffrey Schmid added that "y rationale for dissenting against the rate cut at the last meeting and one that continues to guide my thoughts as I head into the meeting in December. "I view the current stance of monetary policy as being only modestly restrictive, which is about where I think it should be."

Technical outlook: Gold plummets on volatile session below $4,100

Gold's uptrend remains in place despite diving to a four-day low of $4,032, because it has recovered toward $4,100. Although ending the day above the latter is good, it paves the way for consolidation within the $4,100-$4,200 area.

On the other hand, if XAU/USD stays below $4,100, traders could opt for retesting for the second time in the day, the 20-day Simple Moving Average (SMA) at $4,064 ahead of challenging the October 28 low near $3,886.