Gold Falls Below $4,100

 

Gold prices extended their intraday decline on Tuesday, falling below the $4,100 mark and reversing most of the previous session's strong gains toward the $4,150 resistance level. Growing expectations of a potential Federal Reserve interest rate hike have emerged as the main factor driving investors away from the non-yielding precious metal.

Meanwhile, the US Dollar is struggling to attract fresh buyers amid mixed signals surrounding diplomatic negotiations between the United States and Iran. This has provided some limited support for gold, as traders remain cautious ahead of the latest US Consumer Price Index (CPI) report.

Gold Technical Analysis: XAU/USD Maintains Short-Term Bullish Bias

Despite the latest pullback, the XAU/USD pair continues to maintain a positive short-term outlook after breaking above the 100-period and 200-period Simple Moving Averages (SMA) on the 4-hour chart.

Momentum indicators also remain slightly positive, with the Relative Strength Index (RSI) hovering around 57 and the Moving Average Convergence Divergence (MACD) holding just above the zero line. These signals suggest that bullish momentum remains intact, although it has not reached overbought territory.

On the downside, the 200-period SMA near $4,103 represents the nearest support level, followed by the 23.6% Fibonacci retracement at approximately $4,059.

The 100-period SMA around $4,042 provides stronger technical support and remains a critical level for maintaining the current bullish structure.

On the upside, initial resistance is located at the 38.2% Fibonacci retracement near $4,180. Further resistance levels stand at the 50.0% retracement around $4,279 and the 61.8% level near $4,377.

These Fibonacci levels could become the next upside targets if buyers manage to regain control and extend the recent recovery.

US-Iran Tensions Keep Geopolitical Risks in Focus

In the latest developments surrounding the Middle East crisis, US President Donald Trump said there was positive momentum toward ending the war with Iran. He also suggested that a resumption of military strikes was highly unlikely, describing the conflict as effectively over.

However, Mohsen Rezaei, Secretary of Iran's Supreme National Security Council, dismissed reports of active negotiations as fake news. He reiterated that Washington must accept Tehran's seven conditions to bring the conflict to an end.

These conflicting statements have kept geopolitical risk premiums in play, supporting demand for the US Dollar and adding further downside pressure on gold prices.

Strong US Jobs Data Boosts Fed Rate Hike Expectations

The latest US Nonfarm Payrolls (NFP) report, released last Friday, showed that employment increased by 165,000 in October, exceeding even the most optimistic market forecasts.

Additionally, employment figures for August and September were revised upward by a combined 84,000 jobs. The unemployment rate also declined to 4.1%, highlighting the continued resilience of the US economy.

These figures have strengthened expectations that the Federal Reserve could tighten monetary policy further. According to the CME Group's FedWatch Tool, traders are now pricing in more than an 80% probability of a Federal Reserve interest rate hike in December, providing additional support for the Greenback.

US CPI Data Becomes the Next Major Catalyst for Gold

Nevertheless, traders remain reluctant to establish aggressive positions ahead of further signals regarding the Federal Reserve's monetary policy outlook.

Market attention is therefore shifting toward the upcoming US Consumer Price Index (CPI) report, which could play a crucial role in shaping the US Dollar's price dynamics and determining the next significant move in gold.

The inflation data will be particularly important in assessing whether the Federal Reserve has sufficient justification to raise interest rates in December.

For now, traders may prefer to wait for additional downside confirmation before concluding that XAU/USD's recent recovery from the $3,870 region has come to an end. That level marked the pair's lowest point since September 2025, reached last month.

A sustained decline would strengthen the case for a resumption of the broader bearish trend that has dominated gold prices over the past two months.

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Gold Trims Intraday Losses

 

Gold prices recovered most of their early intraday losses, trading with a slightly bearish bias around the $4,070–$4,075 region. The US Dollar extended Thursday's recovery from its lowest level since late September, putting downward pressure on the precious metal. Meanwhile, a hawkish Federal Reserve outlook contributed to gold's pullback from a two-week high reached in the previous session. However, sellers remained cautious ahead of the release of key US monthly employment data, which could provide a fresh catalyst for the precious metal.

The XAU/USD pair maintains a constructive near-term outlook above a Fibonacci retracement cluster between the 50.0% level at $4,006 and the 38.2% level at $4,039. Nevertheless, the intraday decline below the 100-period Exponential Moving Average (EMA) on the four-hour chart serves as a warning signal for bullish traders.

Furthermore, the Relative Strength Index (RSI) at 52.40 has retreated from overbought territory and now indicates neutral-to-positive momentum. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator remains in positive territory, with its line holding above zero. The previous expansion in the histogram also suggests that bullish momentum may be temporarily pausing rather than signaling a confirmed reversal.

Therefore, sustained selling pressure below the 38.2% Fibonacci retracement at $4,039 would strengthen the bearish outlook, potentially pushing Gold toward the 50.0% retracement near $4,006. A decisive break below this area could expose the next support levels at the 61.8% retracement of $3,973 and the 78.6% level at $3,926.

On the upside, immediate resistance is located at the 23.6% Fibonacci retracement near $4,080. A sustained move above this level would pave the way for a potential retest of the latest cycle high at $4,146.

The closely watched US Nonfarm Payrolls (NFP) report is expected to show that the economy added 65,000 jobs in October, recovering from the weaker reading of 29,000 recorded in the previous month. Meanwhile, the unemployment rate is forecast to remain unchanged at 4.2%.

Investors will also pay close attention to Average Hourly Earnings, as wage growth pressures could significantly influence expectations for the Federal Reserve's monetary policy. These closely monitored economic indicators are expected to trigger volatility across financial markets and potentially strengthen demand for the US Dollar, creating a meaningful headwind for Gold prices.

Meanwhile, the Democratic Party's victory in the US midterm elections has fueled concerns about a potential slowdown in artificial intelligence development. This triggered a broad sell-off on Wall Street on Thursday and increased demand for traditional safe-haven assets, including US Treasury bonds.

However, a sharp overnight rebound in crude oil prices reignited inflation concerns. In addition, traders are still pricing in approximately a 70% probability that the US central bank will raise borrowing costs again at its December meeting. This expectation has helped limit the decline in US Treasury yields following their midweek slump, providing additional support for the Greenback.

Geopolitical risk premiums also remain relevant amid uncertainty surrounding US President Donald Trump's next move. On Thursday, Trump said the United States might have to destroy what remains of Iran, adding that the public would soon find out whether he would take action.

Furthermore, Washington and Tehran remain divided over Iran's nuclear program and the Strait of Hormuz. These developments provide additional support for the safe-haven US Dollar, which is seen as weighing on Gold prices.

Despite these headwinds, Gold remains on track to post its first weekly gain in three weeks and continues to trade comfortably above the key psychological $4,000 level.

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Gold Pulls Back From Two-Week High

 

Gold prices edged lower from a two-week high reached during Thursday's Asian session, but remained on track for a second consecutive daily gain, trading around the $4,130 level. The US Dollar extended its post-election losses, falling to a fresh low since late September. This weakness helped gold extend its strong rally of more than 3.5% in the previous session, marking its largest single-day gain since mid-August.

On the four-hour chart, XAU/USD maintains a constructive technical outlook following Thursday's breakout above the 23.6% Fibonacci retracement of the August–October decline and the 200-period Simple Moving Average (SMA). Meanwhile, the Relative Strength Index (RSI) stands at 75.77, indicating overbought conditions. The Moving Average Convergence Divergence (MACD) line remains above its signal line, with a widening positive histogram, suggesting that bullish momentum is still intact despite the increasingly extended rally.

The immediate focus is whether gold buyers can push prices above the 38.2% Fibonacci retracement at $4,186 without triggering a corrective pullback due to overbought conditions. The next resistance levels are aligned with the 50.0% Fibonacci retracement at $4,283, followed by $4,380. Further upside barriers are located at $4,518 and $4,695, potentially limiting the broader medium-term recovery.

On the downside, the 200-period SMA near $4,124, followed by the 23.6% Fibonacci level at $4,065, could provide initial support. A decisive break below the latter would expose the next major structural support near the recent cycle low of $3,871.

US Election Results Weigh on the Dollar

The Democrats' decisive victory in the US midterm elections removed one of the major sources of political uncertainty and reduced expectations that US President Donald Trump would pursue further military action against Iran.

On Wednesday, Senate Democratic Leader Chuck Schumer pledged to push for an end to the Iran war, adding that his party could use its influence over government funding to advance that objective. The developments boosted market optimism and sent crude oil prices to a two-month low, easing concerns over inflation.

Meanwhile, expectations that a prolonged fiscal deadlock in Washington could further constrain government spending placed additional downward pressure on US Treasury yields. The combination of weaker yields and a softer US Dollar provided further support for gold prices.

Dollar Reaction Remains Muted Despite Democratic Victory

Analysts at MUFG/BTMU noted that the scale of the Democratic Party's victory, which exceeded previously reported expectations, had not yet been matched by an equally significant reaction in financial markets. So far, both the US Dollar and Treasury yields have recorded only modest declines.

The analysts also highlighted that political developments could remain a decisive factor for the currency. Any subsequent shift in policy or geopolitical risk assessments could potentially reverse the current weakness in the Dollar and US Treasury yields.

Conversely, MUFG/BTMU suggested that if Trump refrains from attacking Iran and interprets voter opposition to his policies as a reason to pursue a diplomatic agreement, the US Dollar could face an extended period of weakness.

This highlights how the administration's post-election policy response could determine whether the current Dollar correction deepens or eventually reverses.

Fed Rate Hike Expectations Remain Elevated

Despite the political shift, market expectations for further monetary tightening by the US Federal Reserve (Fed) have remained largely intact.

According to the CME Group FedWatch Tool, traders continue to price in more than an 80% probability of a Fed rate hike in December.

These expectations received additional support from a stronger-than-expected US ADP employment report, which showed that private-sector employment increased by 86,000 jobs in October 2026, matching the previous month's downwardly revised reading.

Separately, the Institute for Supply Management (ISM) Services PMI declined to 54.5 last month from 54.9 in September. However, the reading remained comfortably above the 50-point threshold, indicating continued expansion in the US services sector.

Global Central Banks Could Limit Gold's Upside

Expectations of further interest rate increases by other major central banks could also limit gains in non-yielding gold.

The Bank of England (BoE) is widely expected to raise its benchmark interest rate by 25 basis points (bps) at its policy meeting later today.

Meanwhile, the minutes of the Bank of Japan's (BoJ) September meeting revealed that policymakers discussed the need for continued and potentially faster interest rate increases.

Markets are also assigning greater probabilities to potential December rate hikes by the European Central Bank (ECB) and the Swiss National Bank (SNB).

Higher interest rate expectations across major economies could increase the opportunity cost of holding gold, making investors more cautious about chasing further gains in the precious metal.

US Nonfarm Payrolls in Focus

Traders may prefer to remain on the sidelines ahead of Friday's closely watched US monthly employment report, known as the Nonfarm Payrolls (NFP).

The upcoming employment data, alongside speeches from influential Federal Open Market Committee (FOMC) members, will be closely monitored for further clues about the Fed's future monetary policy direction.

These developments could influence near-term demand for the US Dollar and determine whether gold can extend its recent recovery.

In addition, any further developments surrounding the Middle East crisis could trigger fresh market volatility and provide another potential catalyst for gold prices.

Overall, gold retains a bullish short-term bias as the weaker US Dollar and declining Treasury yields provide support. However, overbought technical conditions, elevated Fed rate hike expectations, and upcoming US employment data could trigger profit-taking and limit the precious metal's immediate upside.

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