Central-bank gold purchases have been a key driver of the metal’s sharp rally over the past two years. Policymakers seeking a store of value and portfolio diversification helped gold set a record above $4,380/oz in October. Although prices have pulled back in recent weeks, gold is still up more than 50% year to date.

For many central banks—especially in emerging markets—gold still accounts for a relatively small share of foreign-exchange reserves.

Boosted by soft U.S. economic data, expectations for a Fed rate cut next month intensified, while a weaker dollar provided additional support. Spot gold jumped more than $100 on Monday, breaking above $4,100/oz for the first time since October 27, and rose more than 2.5% intraday.

Data released last week showed a surge in announced layoffs as companies cut costs and adopt artificial intelligence technologies. In addition, a survey published Friday indicated U.S. consumer sentiment in early November fell to a near 3-and-a-half-year low, weighed down by concerns over the economic impact of what has become the longest government shutdown on record.

Meanwhile, the U.S. Senate on Sunday advanced a bill to reopen the federal government, raising hopes of ending the 40-day shutdown. White House economic advisers warned that if the shutdown continued, U.S. GDP growth in the fourth quarter could turn negative.

Ending the shutdown would help clear the fog around the Fed’s rate path. At present, market participants assign a 65% probability to a December rate cut.

Even so, the shutdown has delayed the release of key economic indicators—including October CPI and the jobs report—prolonging the debate over whether the Fed needs to cut again at its December meeting.

Market take:
On the 4-hour chart, gold posted a sharp advance while the MACD lines and histogram above the zero line showed waning momentum. With key U.S. data missing, the market lacks fresh catalysts. After two weeks of heavy declines, selling pressure on gold has eased.