Gold (XAU/USD) firms as traders react to the latest ADP Employment Change report. At the time of writing, XAU/USD is trading around $4,220, with attention now shifting to the ISM Services Purchasing Managers Index due later in the day.

ADP came in noticeably weaker than expected, showing a 32K decline in November. Markets had expected a 5K increase, while October recorded a 47K gain.

The private employment data underscored weakening labour conditions in the US. The report also holds significance as October's Nonfarm Payrolls (NFP) will be published together with the November report on December 16, leaving the Federal Reserve (Fed) with few indicators to gauge labour conditions ahead of next week's monetary policy meeting.

According to the CME FedWatch Tool, markets already price in about an 88% chance of a 25 basis point (bps) reduction, keeping the US Dollar (USD) on the back foot and offering a broadly supportive backdrop for Gold.

Elsewhere, geopolitical tensions remain elevated after US envoys' talks with Moscow on the Ukraine conflict failed to deliver meaningful progress.

Market movers:

Dovish Fed signals and central bank demand keep Gold bid.

US President Donald Trump said on Tuesday that he will announce his nominee for the next Fed Chair in early 2026. This follows his comment on Sunday, "I know who I am going to pick, yeah. We'll be announcing it." NEC Director Kevin Hassett has emerged as a leading contender, and markets view his potential appointment as paving the way for a more dovish policy stance.

Dovish Fed expectations remain a drag on the US Dollar. The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is hovering near its lowest level since October 30, around 98.99 and marking a seventh consecutive day of declines.

US envoy Steve Witkoff met Russian President Vladimir Putin in Moscow on Tuesday to discuss US proposals to end the war in Ukraine, but the meeting ended without any breakthrough.

Putin's foreign policy advisor, Yuri Ushakov, described the talks as "constructive and very informative," though he admitted that "a compromise hasn't been reached yet" on key territorial issues. He added that discussions would continue.

According to a World Gold Council (WGC) report published on December 2, central banks ramped up gold purchases in October, adding a net 53 tonnes, the largest monthly increase so far this year and 36% higher than September.

Source: Fxstreet