Gold prices (XAU/USD) are trading positively around $4,050 in the Asian market on Monday. A weak US labor market, highlighted by private job data, has raised expectations for US interest rate cuts, which is supporting Gold prices. The US Challenger job report revealed over 150,000 job cuts in October, the largest drop in over 20 years. This has fueled speculation about rate cuts, impacting the US Dollar and boosting Gold prices. There’s now about a 66% chance of a rate cut in December.

US Consumer Sentiment

US Consumer Sentiment has fallen to its lowest since June 2022. The Consumer Sentiment Index dropped to 50.3 in November, below the expected 53.2. Additionally, signs that the US government shutdown may end could affect Gold, a safe-haven asset. Gold, which does not yield interest, often rises when interest rates are lower. Central banks have been adding significant amounts of Gold to their reserves, with countries like China and India taking the lead. Gold tends to move in the opposite direction of the US Dollar and Treasuries, and its price can be influenced by geopolitical and economic events. A weak Dollar usually boosts Gold prices. Since Gold is priced in dollars, it acts as a hedge against inflation and declining currencies. Gold prices remain strong around $4,050, largely due to expectations of a Federal Reserve rate cut in December. The recent Challenger report, indicating the largest job cuts in October in over two decades, supports these expectations. This suggests that lower interest rates are becoming more likely, which benefits Gold.

Watching US Government Shutdown

Recent consumer sentiment data from the University of Michigan, which has fallen to mid-2022 levels, reinforces our view of a slowing economy. This ties in with slowing job growth throughout most of 2025, where Non-Farm Payrolls have averaged just 95,000 per month, a significant decrease from the 200,000+ averages of 2023 and 2024. For traders, this strengthens the case for buying call options to bet on potential price increases. We also need to monitor signs that the US government shutdown is coming to an end, as a resolution could temporarily strengthen the dollar and weaken Gold’s appeal as a safe haven. A deal in Washington might lead to a short-term drop in Gold prices. To hedge against this risk, we could think about buying out-of-the-money put options. In addition to US data, it’s important to note the steady demand from central banks, which has persisted since the unprecedented purchases seen in 2022. According to World Gold Council data through the third quarter of 2025, central banks, especially in Asia, are still net buyers, acquiring over 800 tonnes this year. This ongoing demand gives confidence to maintain long positions and makes strategies like selling puts more attractive. Ultimately, our trading decisions will largely rely on the direction of the US Dollar, as Gold is priced in dollars. With a nearly 66% expectation of a December rate cut, the outlook for the dollar seems negative. We can express this view through derivatives strategies like bull call spreads, which would benefit from a rising Gold price while managing our risk exposure. Create your live VT Markets account and start trading now.

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