The end to a historic 40 – day US government shutdown is in sight leading to optimism in the global stock prices, rise in government bond yields (10Y rose to 4.13%) and steady USD.
If the senate passes the bill then the US government funding would be until 30th January 2026. The government is set to reopen from 14th November 2025.
Plenty of economic data that has been delayed would be released and that could provide further clarity for the US Federal Reserve.
The US economy (Consumer Sentiment slumped to a near 3 ½ year low) and the Federal Reserve (blinded for want of economic data) were hard hit due to the shutdown. Had the shutdown dragged on then the Q4 US GDP could remain negative.
Gold is once again showing a strong positive correlation with equity markets despite a firm US Dollar. Gold’s rally has resumed but the sustainability remains uncertain.
Traditionally, gold and stocks used to go the opposite directions, but the relationship has broken down in recent years, Gold and Stocks are going up and down almost in unison.
Gold is rising due to weak US economic data and FED rate cut expectations (pricing in a 63% chance for Dec Fed rate cut) and a softer USD, although risk sentiment remained upbeat.
Unreleased economic data during the shutdown have created a “data vacuum” that temporarily supported the US dollar. However, it remains uncertain how quickly and accurately the backlog of reports will be published once operations resume.
Key US data points of the week are the October CPI and PPI reports scheduled for 13th / 14th November. Data collection delay due to the shutdown could push back the release. Core inflation expectations are 3%. Readings below that with soft growth indicators will price in a Dec rate cut and Dollar Index could break support of 99.
Conversely above 3%, the FED’s dovish stance would get negated, and USD could rebound to 100.
Gold’s short-term correction to $4040 is an opportunity to add long positions, thus buying on dips at support levels $4040, $3980 and $3935.
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