Gold appears to be on hold, with investors eagerly awaiting the end of the longest government shutdown in US history. Once the government resumes operations, markets will shift focus to a key question: will official data confirm what alternative indicators have already suggested—a slowdown in the US economy?

If the slowdown is validated, the precious metal could surge toward the upper boundary of its expected consolidation range between $3,900 and $4,400 per ounce. If not, gold is likely to retreat toward the lower end of that corridor.

Muted reaction to weak ADP employment report

Gold's lack of reaction to disappointing private-sector employment figures from ADP surprised many analysts. Instead of extending its rally, XAU/USD got trapped in a range. Neither Goldman Sachs' forecast of a 50,000 decline in non-farm payrolls for October, nor the rise in the share of Americans expecting higher unemployment to a record 71%, was enough to inspire the bulls.

The probability of a Federal Reserve rate cut in December briefly rose from 63% to 65%, only to revert soon after. This suggests that investors remain skeptical about the Fed's willingness to rely on alternative data sources.

Commerzbank noted that the government reopening comes at a difficult time. The bank expects that the ADP and similar datasets will likely be confirmed by official statistics, strengthening the case for continued monetary easing, which would weaken the dollar and potentially lift gold to an average price of $4,200 per ounce by 2026—a projection shared by UBS.

However, UBS also warned about the temporary nature of federal funding: after January 31, another shutdown could begin, further damaging the US economy.

ETF outflows weigh on prices

According to Societe Generale, gold's reluctance to rise despite weak ADP data can be attributed to ongoing ETF outflows, now in their third consecutive week. The bank estimates that a 1% decline in XAU/USD corresponds to a withdrawal of around 10 tonnes from gold exchange-traded funds.

Still, bulls remain undeterred. Morgan Stanley projects that gold could surpass $5,000 per ounce next year, citing increasing central bank purchases and growing demand for portfolio diversification toward precious metals.

Macro outlook and dollar dynamics

Eurizon Asset Management supports this bullish view, expecting the US dollar to depreciate by about 13.7% over the remainder of Donald Trump's presidential term. The main drivers, according to the firm, will be faster growth in non-US economies and capital outflows from the United States into Europe, Asia, and other regions.

Given gold's inverse correlation with the dollar, any sustained weakness in the greenback would serve as a major tailwind for XAU/USD.

Technical picture

From a technical standpoint, gold's failure to hold above resistance at $4,140 per ounce may represent an early sign of buyer fatigue and could indicate the formation of a 1-2-3 reversal pattern. Until prices reclaim levels above this threshold, short positions remain justified.

In summary, while weak US data and expectations of monetary easing create a supportive backdrop, short-term sentiment toward gold remains cautious. The market's next decisive move will likely depend on official confirmation of the US slowdown and the Federal Reserve's response—factors that could ultimately determine whether gold resumes its ascent or continues to tread water.