Gold prices may consolidate amid Fed rate cut uncertainity, high bond yield

Gold price performance:

 

1. On November 13, spot gold extended its four-day rally, swining between $4,180 and $4246. Earlier, on November 12, the yellow metal surged 1.75 per cent to close at $4,195 on inflation concerns as the US Treasury Secretary Bessent came out with more details on Trump's proposal of sending $2,000 checks to the Americans as tax rebate. He said that the tariff rebate plan is still under discussion and the plan would be for families making less than, say, $100,000. Around 59 per cent of US households earn less than $100,000 a year, according to US Census Bureau data for last year. 
2. At the time of writing this article, the spot gold was trading at $4,201, up 0.1 per cent for the day. The MCX December gold contract was at ₹126,750, up 0.23 per cent. 
3. The yellow metal has risen 8.1 per cent from the cycle low of $3,886, reached on October 28, following its slump from its record high of $4,381 made on October 20. 
4. In the week ending November 7, the shiny metal, extended its weekly decline to the third consecutive week as it closed at a weekly loss of $1 at $4,001.

 

US Government shutdown ends:

1. Record US government shutdown ended after 43 days as US President Trump signed legislation which will enable the US Government to resume normal operations and Federal workers are expected to be back on their jobs starting November 13, though full restart may take weeks/days. 
2. The House voted 222-209 to pass interim funding through Jan. 30. 
3. Congress will decide in December 2025 whether to extend Covid-19 pandemic-era tax credits that make Affordable Care Act (ACA) plans more affordable. In case the credits aren't extended, they'll expire at the end of 2025. 
4. Per Congressional Budget Office estimate, a six-week government shutdown would reduce real GDP growth in Q4 by 1.5 per cent, though this loss may reverse in H1 2026 due to the impact of 'One Big Beautiful Bill Act' (OBBBA) signed by the President Trump as new tax cuts take effect.

 

Gold ETFs and COMEX Gold inventory:

 

1. Total known global ETF holdings stood at 97.34 MOz as of November 12 as holdings rose after two straight days of outflows. The current ETF holding level, although down nearly 1.6 per cent from the cycle high of 98.94MOz seen on October 21, is still near three-year high and is up 17.48 per cent YTD. 
2. COMEX Gold eligible inventory currently at 18.21 MOz is down 18.88% from the cycle peak of 22.45 MOz seen in April during tariff turmoil.

 

Data roundup:

 

1. White National Economic Director Kevin Hassett said that October job report will not include unemployment rate. He added that household survey will not be released either as some of the surveys were never actually completed. 
2. October CPI report will not be released. 
3. However, September data including nonfarm payroll, retail sales and personal income are likely to be released in the next few weeks along with Q3 GDP some of the October data. Q3 US GDP is expected to show strong growth in the tune of 3-4% annualized growth rate. 
4. Lack of October CPI report means that the US Federal Reserve's job will become challenging when it meets on December 17-18 to decide on its monetary policy. 
5. China's M1 money growth slowed to an annual pace of 6.2% om October from 7.2% in September, though it is still elevated. China’s credit expansion was the weakest in more than a year due to slower government bond sales and sluggish borrowing demand.  
6. Aggregate financing increased 815 billion yuan, the lowest level since July 2024, lagged the 1.2 trillion-yuan forecast by a wide margin.  
7. The UK economy in 3Q grew at annualized rate of 0.1% Vs the forecast of 0.2%, though a rebound is possible in Q4.

Fedspeak:

1. The Fed Governor Miran once again called the Fed's policy to be too restrictive and he cautioned Fed not to take inflation data on face value. He added that the Fed should cut rate by minimum 25 bps in December. 
2. Susan Collins, president of the Federal Reserve Bank of Boston and Raphael Bostic, Atlanta Fed President Raphael, opposed rate cut in December due to resilient economy and elevated inflation. 
3. Bostic will step down as president of the Federal Reserve of Atlanta next year, which will give the Trump's Administration to increase its influence at the Fed. It is to be noted that the presidents of the 12 regional Fed Banks are up for reappointment in Marach 2026 as a part of the process that happens every five years.

 

Dollar Index and yields:

1. The US Dollar Index fell nearly 0.45 per cent to 99.07 on Euro option demand. 
2. US yields reversed their Wednesday's decline on hawkish Fedspeak and data uncertainty. 
3. Ten-year US yields at the time of writing this article were hovering around 4.10 per cent, up nearly 0.7 per cent for the day, while 2-year yields at 3.58 per cent were up nearly 0.6 per cent.

 

US Fed rate cut probability:

1. The December Fed rate cut probability fell from 63% on November 12 to 47% on November 13 due to data uncertainty and hawkish Fedspeak.

 

Upcoming data:

1. China will release retail sales, industrial output and investment data on Friday. The data are expected to come in weaker than September.

 

Gold price outlook:

1. ETF outflows and firm US yields are somewhat bearish for the metal in near-term. 
2. Gold is expected to consolidate its gains in short-term due to data uncertainty and weakness in the US bonds. 
3. Downside is expected to be limited on concerns about the US job market and expectations of Fed rate cut in December. 
4. Dip buying is preferred over chasing the rally. 
5. Support is at $4,160 (₹125,500)/$4,100 (₹123,700). The yellow metal needs to take out strong resistance around $4,260 (₹128,500) to challenge the next major resistance of $4,381 (₹132,000), all-time high.  

    ==========================  Disclaimer: Praveen Singh is the head - currencies and commodities at Mirae Asset Sharekhan. Views expressed are his own.