(MENAFN- Khaleej Times)

Gold prices rose to a two week high on Monday, as hopes of a Fed rate cut was boosted by a set of weak US economic data. A softer US dollar lent additional support.

According to Reuters data, spot gold climbed 2.1 per cent to $4,082.17 per ounce by 1138 GMT, hitting its highest level since October 27. US gold futures for December delivery rose 2 per cent to $4,090.50 per ounce. The dollar index fell 0.1 per cent, making gold more affordable for overseas buyers.

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According to analysts, the move underscores renewed investor caution amid persistent uncertainty surrounding US fiscal negotiations and delayed economic releases.

The latest US PMI figures slipped below 50, signaling contraction across key sectors and reigniting concerns over slowing growth momentum. At the same time, the US dollar index edged 0.1 per cent lower, easing pressure on dollar-denominated assets and lending support to bullion.“Together, these factors reinforced gold's appeal as a defensive hedge against economic weakness and policy uncertainty,” said Mohanad Yakout, senior markets analyst, Scope Markets.

Market sentiment remains sensitive to developments in U.S government shutdown resolution talks, which continue to dominate short-term risk appetite. Prolonged delays in key data publications due to the political impasse have further clouded the economic outlook, keeping volatility elevated across major asset classes.“Investors appear to be positioning cautiously, favoring gold as a store of value amid mixed macro signals,” Yakout said.

Due to the government shutdown, there was a blackout in official data releases. Investors turned to private reports for direction. The private data reflected softening in labour market conditions in October and weaker consumer sentiment. The University of Michigan's index came in at 50.3 versus expectations of 53.2, reinforcing gold's appeal as a safe-haven asset. The Senate's initial approval to reopen the government paves the way for key economic data releases to resume once the House passes the bill. The data is crucial for assessing the nation's economic health. While the reopening could weigh on gold, the possibility of a December rate cut can continue to support prices.“On the technical side, gold is trading above its 9-day SMA, showing positive momentum. After staying range-bound between $3,925 and $4,046, it broke above the upper level, signaling further upside potential. It's now testing the 21-day SMA at $4,074, and a break above could open the way toward $4,124. The RSI has edged up from 51 to 54, while support sits near $3,925,” said Vijay Valecha, Chief Investment Officer, Century Financial.

From a technical perspective, the $4,000 level has emerged as a crucial psychological and structural support.“Sustained price action above this threshold has encouraged a near-term retracement higher, with momentum indicators pointing to continued buying interest while overbought conditions remain limited. Immediate resistance is seen near $4,100–$4,120, where profit-taking could briefly cap upside momentum before any potential extension higher,” Yakout said.

Overall, gold's latest rally reflects a combination of macro-driven risk aversion and technical resilience.“As markets await clarity on U.S fiscal developments and broader economic direction, gold may continue to benefit from its dual role as both a hedge against uncertainty and a tactical trade in a volatile environment,” Yakout said.

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