Gold (XAU/USD) is trading slightly lower on Wednesday, with investors adopting a cautious approach ahead of key US economic releases due later in the day. The metal is currently consolidating around the $4,200 psychological level after retreating from an intraday high near $4,228.
The focus now turns to the ADP Employment Change and the ISM Services PMI—two indicators that could influence market sentiment ahead of next week’s Federal Reserve (Fed) policy meeting.
The ADP report will be particularly important for assessing labour-market momentum, especially with October’s Nonfarm Payrolls (NFP) set to be published together with the November figures on December 16. With only limited data available before the upcoming decision, policymakers will have few additional cues to evaluate employment conditions.
Despite this, markets remain confident that the Fed will deliver a 25 basis point (bps) rate cut, with the probability hovering around 87%. This expectation has kept the US Dollar (USD) under pressure, broadly supporting demand for Gold.
Meanwhile, geopolitical tensions continue to simmer after discussions between US envoys and Moscow failed to produce meaningful progress on the Ukraine conflict.
Market Drivers: Dovish Fed tone and central bank buying support Gold
US President Donald Trump said on Tuesday that he will announce his nominee for the next Fed Chair in early 2026. This follows his earlier remark, “I know who I am going to pick.” NEC Director Kevin Hassett is widely seen as a leading contender, and markets perceive his potential appointment as reinforcing expectations of a more dovish policy direction.
Dovish Fed bets continue to weigh on the US Dollar. The US Dollar Index (DXY), which measures the Greenback against six major currencies, is trading near its lowest level since October 30, around 98.99, marking its seventh straight session of losses.
On the geopolitical front, US envoy Steve Witkoff met Russian President Vladimir Putin on Tuesday to discuss proposals aimed at ending the war in Ukraine. Although the talks were described as “constructive and very informative” by Putin’s foreign policy advisor Yuri Ushakov, no breakthrough was reached, particularly on territorial disputes. Discussions will continue, according to officials.
Adding to Gold’s support, a recent World Gold Council (WGC) report from December 2 revealed that central banks increased their gold reserves by a net 53 tonnes in October—the largest monthly purchase this year and 36% higher than September’s total.
