Gold Gains as Markets Weigh an End to Shutdown, Fed Rate Path

U.S. stock futures indicated that Monday’s selloff is set to continue, reflecting a negative sentiment in the markets. The dollar, gold, and bitcoin also experienced declines, alongside Treasury yields, as investors sought safety amid economic uncertainties. This downturn follows a period of optimism regarding U.S.-China trade talks, which had previously buoyed market sentiment.

Kriti Gupta, Valerie Tytel, and Mark Cudmore discussed the current market dynamics on Bloomberg's 'The Opening Trade.' They highlighted that gold is considered a more effective hedge against fiat currency fluctuations compared to Bitcoin. This analysis reflects ongoing debates among investors regarding the relative stability and reliability of traditional assets like gold versus cryptocurrencies.

Adrian Zuercher of UBS stated that the equity market has significant upside potential if the Federal Reserve indicates further rate cuts. In an interview with Bloomberg Television, he noted that US markets are currently healthy, bolstered by strong earnings in the third quarter. However, he also mentioned that many investors are positioned for profit-taking, which may lead to fluctuations in the market.

Investors are gaining confidence in a potential rebound of the South Korean won, bolstered by recent verbal interventions from Korean authorities. These statements have reinforced expectations of stronger economic growth and the possibility of easing measures from the Federal Reserve, which could help mitigate further losses in the currency's value.

Gold prices stabilized after experiencing two consecutive days of losses. This fluctuation was primarily driven by diminishing expectations that the US Federal Reserve would implement interest rate cuts in the near future.

The Federal Reserve's next interest-rate cut may be delayed until 2026 due to persistent inflation, unclear economic indicators, and increasing divisions among Fed officials. Previously, markets had anticipated a near-certain rate cut in December, with some Fed officials also expecting a reduction. However, the current economic landscape suggests a more cautious approach to monetary policy adjustments in the near future.

Bond traders are preparing for a significant influx of data that is expected to clarify the pace at which the Federal Reserve will proceed with interest-rate cuts. These cuts have contributed to the largest gains in US Treasuries since 2020, reflecting a shift in market expectations. The upcoming data release is anticipated to solidify traders' expectations regarding the Fed's monetary policy decisions.

United Airlines has announced a significant number of flight cancellations for spring 2026 due to the ongoing U.S. government shutdown, which has resulted in staffing shortages among TSA agents and air traffic controllers. Many employees have been forced to work without pay, leading to operational disruptions across the airline industry. This situation has compelled airlines to reduce their flight schedules substantially, impacting travelers and the overall air travel experience.