The price of gold has dipped slightly due to uncertainty about when key US economic data will be released. These reports were delayed by the US government shutdown, and the Bureau of Labor Statistics will announce new dates soon. However, upcoming data to assess the economy may not be available right away. The shutdown likely hindered data collection, which will impact October’s labor market report, particularly leaving out the unemployment rate.

Federal Reserve Concerns

Some members of the Federal Open Market Committee are uneasy about making further interest rate cuts without reliable data, especially regarding the labor market and inflation. Consequently, the majority may decide to hold off on any interest rate changes in December while waiting for clearer economic indicators. The FXStreet Insights Team consists of journalists who gather market insights from various experts. Their reports include notes and observations from both internal and external analysts, but do not provide personalized investment advice. We are currently facing significant uncertainty after the US government shutdown, which has disrupted important economic data. This complicates predictions about the Federal Reserve’s next actions, especially for their December meeting. During the 35-day shutdown from 2018-2019, we also saw data delays, leading to increased market volatility once the information was finally available. The main concern is that some Fed members are reluctant to cut interest rates without solid labor and inflation data. Before the shutdown, October’s headline inflation was already sticky at 3.4%. This lack of data raises the risk that the Fed may keep rates steady in December. The CME FedWatch Tool, which tracks market expectations, shows that the chance of a rate cut in December has dropped from over 70% to just below 55% in the past two weeks.

Market Strategy Implications

For gold traders, this situation suggests a cautious or even bearish approach in the short term. With gold prices currently hovering just under $4,000, if the Fed delays a rate cut, it could lead to a sharp sell-off. Consider buying put options on gold ETFs to protect against this downside risk or using straddles to benefit from a big price movement in either direction once clarity returns. This uncertainty also opens opportunities in the currency markets, particularly for the US dollar. If the expected rate cut is postponed, the dollar will likely strengthen against other major currencies. Taking long positions in the US Dollar Index (DXY) or purchasing call options on dollar-tracking ETFs could be a smart strategy in the upcoming weeks. Overall market volatility is a direct result of this data gap. The CBOE Volatility Index (VIX) is currently at a relatively low 16, but this could change quickly as the Fed’s December meeting approaches without clear economic signals. This presents a chance to buy VIX call options as a low-cost hedge against a potential market shock. Create your live VT Markets account and start trading now.

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