XAU/USD Pulls Back Below $4,200 as Traders Digest Fed Outlook Amid Gold Trading Hours

Gold retreats to approximately $4,195 during early Tuesday trading in Asia. - CME FedWatch data shows markets assigning a 90% probability to a 25 basis point reduction at December’s FOMC decision. - Key US employment figures—including the ADP four-week employment average and September-October JOLTS openings—are set for release on Tuesday before the Fed announcement.

During the Asian gold trading hours on Tuesday morning, XAU/USD trades below the $4,200 level, hovering near $4,195. The decline reflects growing apprehension that the Federal Reserve might maintain a restrictive policy stance despite cutting rates on Wednesday.

Market participants have revised their expectations sharply. The probability of a 25 basis point rate cut at December’s FOMC meeting has climbed to 90%, a significant jump from approximately 66% last month, according to CME FedWatch tool readings. The critical question for traders is whether this reduction will come with dovish or hawkish accompanying remarks.

“The market is watching intently for the Fed’s policy signaling,” according to market analysis. The Federal Open Market Committee’s press conference and the Summary of Economic Projections—commonly referred to as the ‘dot-plot’—will provide crucial direction. Should policymakers deliver what analysts term a “hawkish cut,” expect the US Dollar to strengthen and pressure gold prices further.

Ahead of the Fed’s Wednesday decision, attention turns to labor market data. The Tuesday release will feature the ADP Employment Change four-week moving average alongside JOLTS Job Openings figures for the prior two months. Disappointing employment readings could strengthen the case for rate cuts, potentially supporting bullion prices. Since lower interest rates reduce the carrying cost of non-yielding assets like gold, softer employment data might provide support.

Beyond economic indicators, geopolitical considerations continue influencing safe-haven demand. Recent escalating rhetoric between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy—with Trump stating Ukraine’s leadership hasn’t sufficiently reviewed peace proposals—adds an uncertainty premium to traditional risk-off assets.

For gold traders monitoring the Asian gold trading hours, the combination of Fed rate-cut expectations, employment data, and geopolitical tensions creates a complex backdrop. The interplay between these factors will likely determine whether bullion consolidates or accelerates its downside movement.