Gold Pulls Back as Dollar Strengthens Amid Cautious Fed Outlook

Gold retreated on Friday after a strong rally earlier in the week, slipping from recent three-week highs as momentum faded and the US Dollar steadied. The metal hovered near $4,100, reflecting a shift in sentiment driven by a more cautious outlook from Federal Reserve officials.

The end of the US government shutdown removed a layer of safe-haven demand that had supported gold in recent sessions. At the same time, careful remarks from Fed policymakers prompted traders to reassess the likelihood of a rate cut in December. With expectations cooling, the Dollar regained some footing after a period of weakness, naturally weighing on gold.

Despite the pullback, gold remains on track for a weekly gain, thanks in part to broader uncertainty in global markets. Concerns about overstretched valuations in technology and AI-linked equities have made investors more cautious, softening overall risk appetite. This mixed backdrop helped prevent a deeper slide in gold prices.

Investors now await delayed US economic releases to gauge whether the Fed could shift its stance later in the year. Market participants are especially focused on upcoming employment data, which is expected to offer clearer guidance on monetary policy.

Meanwhile, political developments in Washington continue to inject fragility into market sentiment. The temporary measure that ended the shutdown only funds government operations for a limited period, leaving the possibility of renewed disruption early next year. This lingering uncertainty adds another layer of complexity for markets already adjusting to shifting interest-rate expectations.

In short, gold’s retreat reflects a balance between fading risk appetite and a stronger Dollar, with the metal holding firm as investors await clearer signals from the US economic calendar and the Federal Reserve’s evolving message.