Gold Holds Gains

 

Gold Price Forecast: XAU/USD Stays Above $4,000 as US Midterm Elections Weigh on the US Dollar

Gold prices maintained strong intraday gains near their weekly highs on Wednesday, trading comfortably above the psychological $4,000 mark during the early European session. The rally was supported by broad-based US Dollar weakness following the latest developments in the US midterm elections.

Democratic victories in both the House of Representatives and the Senate have increased the likelihood of political gridlock in Washington. Growing political uncertainty has also encouraged investors to seek safe-haven assets, putting downward pressure on US Treasury yields. This combination has weighed on the Greenback while providing additional support for the precious metal.

Gold Technical Analysis: XAU/USD Faces Key Resistance Levels

Despite the recent recovery, XAU/USD maintains a bearish technical bias as it continues to trade below the 100-period Simple Moving Average (SMA) on the 4-hour chart and remains beneath the key Fibonacci retracement levels of the decline from its mid-October peak.

The 23.6% Fibonacci retracement level at $3,947 represents the nearest resistance, followed by the $3,970 zone. Meanwhile, the Relative Strength Index (RSI) stands at 48.94, close to neutral territory, while the Moving Average Convergence Divergence (MACD) remains positive at 6.65. These indicators suggest that bearish momentum is stabilizing, although the recovery is not yet strong enough to challenge the prevailing downward trend.

A sustained break above the $3,970 resistance could open the door toward the 38.2% Fibonacci retracement at $3,995. Further gains could then push Gold toward the 50.0% retracement level at $4,033.

Beyond this level, the 100-period SMA at $4,057, followed by the 61.8% and 78.6% Fibonacci retracement levels at $4,072 and $4,127, respectively, will represent the next major obstacles before the previous cycle peak near $4,197.

On the downside, the key structural support remains around the Fibonacci reference level of $3,869. Buyers could attempt to defend this area if renewed bearish pressure emerges.

Fed Rate Hike Expectations Continue to Limit Gold's Upside

Despite support from a weaker US Dollar, expectations of a more hawkish Federal Reserve (Fed) have prevented Gold from extending its intraday recovery.

According to the CME Group FedWatch Tool, traders are currently pricing in nearly an 80% probability that the US central bank will raise interest rates again at its next policy meeting in December.

These expectations strengthened following Tuesday's release of the US Job Openings and Labor Turnover Survey (JOLTS). The report showed that labor demand remained relatively resilient in September, with job openings increasing to 7.523 million from an upwardly revised 7.190 million in August.

The latest labor market data, combined with resilient economic growth and persistent inflationary pressures, has reinforced expectations of another Fed rate hike.

This outlook continues to weigh on non-yielding assets such as Gold, keeping prices vulnerable below the $3,970 resistance zone despite support from US Dollar weakness.

US-Iran Tensions Keep Geopolitical Risks in Focus

Meanwhile, geopolitical risk premiums remain elevated despite ongoing diplomatic efforts to end the eight-month-long US-Iran conflict.

In the latest developments, US President Donald Trump told the Financial Times on Tuesday that Washington had no immediate plans to launch an attack on Iran, despite Israeli Prime Minister Benjamin Netanyahu hinting at a possible strike later this weekend.

At the same time, a senior Iranian official told Reuters that the Strait of Hormuz would only reopen if sanctions were lifted and the US naval blockade ended.

Iran's Islamic Revolutionary Guard Corps (IRGC) also claimed that four oil tankers had been destroyed after striking mines south of the Strait of Hormuz.

These developments have heightened concerns over potential oil supply disruptions and renewed inflationary pressures stemming from volatile energy prices. Such risks could strengthen the case for further monetary policy tightening by the Federal Reserve, creating another challenge for Gold.

US Economic Data and NFP Report in Focus

Traders are now turning their attention to Wednesday's US economic calendar, which includes the ADP private-sector employment report and the ISM Services Purchasing Managers Index (PMI). Incoming geopolitical developments could also provide fresh trading opportunities for Gold.

However, market attention remains firmly focused on Friday's closely watched US Nonfarm Payrolls (NFP) report, which could influence US Dollar demand and determine the precious metal's near-term direction.

Overall, the combination of political uncertainty, geopolitical tensions, US Dollar weakness, and rising Fed rate hike expectations creates a mixed fundamental backdrop for Gold.

Although XAU/USD has staged a recovery from last Friday's lowest level since September 2025, traders may prefer to wait for stronger follow-through buying before confirming that the precious metal has established a sustainable bottom and is ready to extend its recovery.

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Gold Breaks Below

 

Gold prices fell below the psychological $3,900 level during the first half of the European trading session on Tuesday, approaching their lowest level since October 2025, which was recorded last week. Expectations of further monetary tightening by the US Federal Reserve (Fed) continued to weigh on the precious metal, offsetting the weakness in the US Dollar ahead of the US midterm elections.

Data released on Monday showed that US manufacturing business activity expanded for the tenth consecutive month in October. The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) rose to 55.5 from 54.5 in September, exceeding market expectations and reinforcing concerns that the US economy remains resilient.

The stronger-than-expected manufacturing data strengthened expectations that the Fed could maintain a hawkish monetary policy stance for longer, increasing pressure on non-yielding assets such as Gold.

Gold Technical Outlook

The XAU/USD pair maintains a short-term bearish bias, trading below the 100-period Exponential Moving Average (EMA) on the four-hour chart. Furthermore, the overnight rejection near the late-October swing low, followed by renewed selling pressure, reinforces the negative technical outlook despite the slightly positive Moving Average Convergence Divergence (MACD) indicator.

Meanwhile, the Relative Strength Index (RSI) is hovering near 40.0, suggesting that the recent recovery from oversold conditions remains tentative and lacks sufficient bullish momentum.

On the downside, sellers are likely to target Friday's swing low around the $3,870 area. A decisive break below this level could open the door to further losses and extend the prevailing bearish trend.

On the upside, immediate resistance is located at the 100-period EMA near $4,053. A sustained move above this level would be necessary to ease the current selling pressure and create room for a more meaningful recovery.

US Midterm Elections and Iran War

Despite the bearish outlook for Gold, the US Dollar continues to struggle to attract strong buying interest as traders remain cautious ahead of the US midterm elections, which will determine control of Congress.

Prediction markets currently favor Democrats to gain control of both the House of Representatives and the Senate. Conversely, a Republican victory in both chambers would represent a major surprise for financial markets, potentially triggering higher US Treasury yields and strengthening the US Dollar.

Meanwhile, growing hopes for a diplomatic resolution to the US-Iran conflict could further discourage aggressive bullish positioning in the Greenback.

US President Donald Trump said on Monday that Iran wanted to reach an agreement to end the war and that a deal could potentially be achieved. Iranian Foreign Minister Abbas Araqchi also stated that consultations through mediators were progressing intensively.

However, several days of negotiations between Iranian officials and Qatari mediators failed to produce a breakthrough. This came despite Tehran revising its proposal to temporarily reopen the strategically important Strait of Hormuz for two days, subject to Washington meeting a series of conditions.

At the same time, renewed tensions between Russia and Ukraine continue to keep geopolitical risk premiums elevated. This development could provide underlying support for the US Dollar, suggesting that Gold remains vulnerable to further downside pressure.

JOLTS and NFP in Focus

On the economic calendar, traders will monitor the upcoming release of US JOLTS Job Openings data during the North American session for fresh trading signals.

However, the main market focus will remain on Friday's highly anticipated US monthly employment report, particularly the Nonfarm Payrolls (NFP) data.

The employment figures could provide important clues about the strength of the US labor market and influence expectations surrounding the Federal Reserve's next monetary policy decisions.

For Gold traders, the combination of US economic data, interest rate expectations, geopolitical developments, and the outcome of the US midterm elections will remain crucial factors in determining the precious metal's next direction.

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Gold Price Today

Gold prices trimmed part of their modest intraday gains on Monday, trading with a slight positive bias below the psychological $3,900 level during the early European session. The US Dollar (USD) attracted fresh selling pressure amid optimism over a potential diplomatic breakthrough to end the US-Iran war, providing some support for the precious metal. However, persistent expectations of further Federal Reserve (Fed) interest rate hikes, fueled by energy-driven inflation concerns, continued to weigh on non-yielding Gold, keeping prices near their lowest level since October 2025, reached on Friday.

Friday's decisive break and close below the key $4,000 psychological threshold triggered additional selling pressure. Furthermore, Gold remains well below the 100-period Exponential Moving Average (EMA) on the four-hour chart, reinforcing the bearish short-term outlook.

The Moving Average Convergence Divergence (MACD) indicator remains in negative territory, with the MACD line below the signal line and the histogram showing limited momentum. Meanwhile, the Relative Strength Index (RSI) stands at 28.94, indicating oversold conditions. This suggests that although selling pressure remains dominant, the latest decline may have become excessive in the short term, potentially leaving room for a technical rebound.

Nevertheless, any further recovery in Gold prices could attract fresh sellers. The 100-period EMA at $4,068.55 represents a key resistance level that buyers must reclaim to ease the current bearish bias. On the downside, traders are closely watching Friday's swing low near $3,870 as a potential demand zone. A decisive break below this support could accelerate the established downward trend and expose Gold to further losses.

US-Iran Diplomacy Supports Gold, but Risks Remain

Iranian negotiators reportedly held discussions with Qatari mediators for the third consecutive day on Sunday in an effort to advance an agreement to end the US-Israeli war against Iran.

In a related development, Iran proposed a 48-hour plan to reopen the Strait of Hormuz, subject to Washington meeting several conditions. These reportedly include lifting sanctions imposed following the Islamabad memorandum and reducing the US military presence in the region.

US President Donald Trump also stated that negotiations with Iran were progressing well and suggested that Tehran wanted to reach an agreement.

However, Trump did not rule out further military action after the November 3 midterm elections. Meanwhile, Iran's Supreme Leader Mojtaba Khamenei reportedly instructed senior military commanders to prepare for a potential renewed confrontation with the United States and Israel while expanding Tehran's retaliation options.

These developments, combined with fresh Ukrainian attacks on Russian oil refineries, have kept geopolitical risk premiums elevated. Uncertainty surrounding the Middle East continues to influence market sentiment and leaves the US Dollar vulnerable to further selling pressure.

Although a weaker dollar can support Gold by making the metal cheaper for holders of other currencies, persistent geopolitical uncertainty complicates the outlook. Consequently, traders should remain cautious before assuming that Gold can sustain a meaningful recovery.

Fed Rate Hike Bets Limit Gold Recovery

Meanwhile, US macroeconomic data released last Thursday pointed to resilient economic growth and persistent price pressures, strengthening expectations of further monetary tightening by the Federal Reserve.

According to the CME Group FedWatch Tool, traders are currently pricing in approximately a 75% probability that the US central bank will raise borrowing costs again in December.

Higher interest rates generally weigh on Gold because the non-yielding metal becomes less attractive compared with interest-bearing assets. This dynamic could limit the upside potential for XAU/USD, even as a weaker US Dollar provides some near-term support.

Against this backdrop, Gold needs strong follow-through buying to establish a sustainable short-term bottom. Without a convincing recovery, the precious metal remains vulnerable to renewed selling pressure.

Key US Economic Data in Focus

Market participants are now turning their attention to several important US economic releases scheduled for the beginning of November.

The US ISM Manufacturing Purchasing Managers' Index (PMI) is due later on Monday, followed by the ISM Services PMI on Wednesday. Investors will then focus on Friday's closely watched US Nonfarm Payrolls (NFP) report for fresh clues about labor market conditions and the Federal Reserve's next policy move.

Stronger-than-expected economic data could reinforce expectations of another Fed rate hike, potentially supporting the US Dollar and placing additional pressure on Gold prices. Conversely, weaker figures could ease monetary tightening concerns and provide the precious metal with room to recover.

Overall, the combination of elevated interest rate expectations, geopolitical uncertainty, and bearish technical indicators suggests that Gold's recovery attempts may attract renewed selling interest. Unless buyers reclaim key resistance levels, the short-term outlook for Gold remains bearish, with the $3,870 area emerging as an important support zone to watch.

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