Gold prices fell on Wednesday as market sentiment shifted and demand for the US Dollar rose. This change came as the US government showed signs of reopening, leading investors to seek riskier assets rather than safe-havens like gold. A slight rise in the US Dollar also added pressure on gold. However, worries about a long-term government shutdown and its economic effects may prevent further dollar gains, which could help stabilize gold prices. Traders are likely to hold off on selling heavily until they hear from important Federal Reserve officials about potential rate cuts.

Effects of US Government Reopening

The reopening of the US government has brought more focus to financial issues. Economists predict that GDP could drop by 1.5-2.0% due to the shutdown. Recent reports show job losses in October and higher unemployment, increasing the chances of a Federal Reserve rate cut. This led to a drop in the US Dollar, allowing gold prices to briefly rise above $4,100, despite overall market optimism. In terms of technical analysis, gold is facing resistance at $4,150-4,155. If it surpasses $4,200, there could be a recovery. Support is seen around $4,100-4,075. If prices fall below these levels, more selling could happen, bringing prices down to $3,900, which would challenge bullish sentiment. Today, November 12th, 2025, gold is retreating due to a stronger dollar and positive sentiment in the stock market. However, this decline might be temporary as signs of an economic slowdown emerge. The latest Consumer Price Index (CPI) report for October indicated that inflation eased to 3.1%, below expectations, and strengthens the case for future rate cuts by the Federal Reserve.

Fed Rate Cut Expectations

The lower inflation rate, along with the recent jobs report showing nonfarm payrolls grew by only 150,000, supports our belief that the Fed’s tightening cycle is over. According to the CME FedWatch tool, there’s now over a 70% chance of a rate cut by the end of the first quarter of 2026. This situation is expected to continue providing support for non-yielding gold in the coming weeks. For traders, this environment suggests that buying during dips may be a smart strategy, especially using options to manage risk. We remember the market’s volatility during the US government reopening when gold faced challenges around $4,155, while $4,100 acted as support. Options to consider could include buying calls with strikes near $4,200 or selling put spreads below $4,100 to prepare for a potential price increase while controlling downside risk. We need to stay alert for upcoming economic data and comments from Fed officials, as these factors will heavily influence volatility. The swift correction from last October’s all-time high reminds us how quickly market sentiment can change. Therefore, using derivatives can help in taking advantage of potential gains while clearly setting limits on risk for each trade. Create your live VT Markets account and start trading now.

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