$4,000 reclaimed: Gold rises as US midterm sweep drives USD lower, Oil tumbles

$4,000 reclaimed as Gold rebounds from its daily low of $3,919.
4.904% yield on US 10-year Treasuries follows a six-basis-point decline.
79% odds of a December Fed rate hike remain elevated before NFP.

Gold (XAU/USD) trades at $4,047. The metal rebounded from a daily low of $3,919, gaining nearly 3% on Wednesday as the US Dollar slumped after the Democrats swept the US midterm elections. Attention now turns to Friday’s October Nonfarm Payrolls release.

Nearly 3% gain in XAU/USD as weaker US Dollar and lower Treasury yields lift Gold

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Having recouped some earlier losses, Wall Street is trading higher. With the preliminary US Q3 GDP reading reaching the 3% threshold, concerns over stricter artificial intelligence (AI) regulation, including a possible ban on data centres, could weigh on the economy.

A weaker US Dollar (USD) has strengthened demand for Gold. The metal has rebounded since reaching a year-to-date (YTD) low of $3,870 on October 30.

A Congress dominated by Democrats could hurt GDP, analysts have argued. Some administration proposals might be blocked, potentially slowing the economy.

At 54.5, October’s ISM Services Purchasing Managers Index (PMI) missed the 54.8 forecast and eased from 54.9 in the previous month. The US figures indicated continued expansion in services-sector business activity, but at a slower rate. The survey’s employment component increased. New orders and prices paid both fell, although they stayed in expansionary territory.

Private-sector hiring remained steady in October, according to the ADP Employment Change report. Companies added 86K workers, exceeding the 69K forecast.

Following the election, oil prices eased as expectations grew that the US Congress may remove US President Trump’s war powers. Such a move would not come until the Democratic wave takes over in January 2027. West Texas Intermediate (WTI) trades at $87.50 per barrel, down more than 8%.

Markets meanwhile assign a 79% probability to a 25-basis-point interest-rate increase by the Federal Reserve (Fed) in December. That prospect is negative for Gold, which typically benefits from low interest rates.

Lower US Treasury yields nevertheless underpin Gold’s advance. Following a decline of 6 basis points, the US 10-year Treasury note yields 4.904%.

Thursday brings jobless claims data and speeches from Fed officials. Traders will then focus on Friday’s main release, Nonfarm Payrolls.

$4,000 reclaimed: XAU/USD technical outlook puts $4,100 in focus

Gold’s market structure still points to a downtrend. Buyers are nevertheless building momentum as the metal approaches a key resistance trendline. After a parabolic rise towards the neutral 50 mark, the Relative Strength Index (RSI) is close to turning bullish.

A recovery above $4,100 would open the way for XAU/USD to test the confluence of its 100-day and 50-day Simple Moving Averages (SMAs), at $4,204 and $4,215 respectively. Beyond that area, the 200-day SMA at $4,474 would be the next target.

A break below $4,000 is needed for Gold’s downtrend to continue. That would bring into view $3,971, the November 3 high now acting as support. Further support lies at the October 30 year-to-date low of $3,879, followed by $3,500, the April 22, 2025 daily high now serving as support.

Gold: frequently asked questions

What attracts investors to Gold?

Widely used to preserve value and facilitate exchange, Gold has held an important place throughout human history. Beyond its lustre and use in jewellery, the precious metal is now broadly regarded as a safe-haven asset: an investment considered attractive during periods of turbulence. Because it is not dependent on a particular issuer or government, Gold is also widely viewed as protection against inflation and currency depreciation.

Which buyers hold the most Gold?

The largest holders of Gold are central banks. To support their currencies during unsettled periods, they typically diversify reserves and purchase Gold, reinforcing perceptions of economic and currency strength. Substantial Gold reserves can bolster confidence in a country’s solvency. According to World Gold Council data, central banks increased their reserves by 1,136 tonnes in 2022, worth around $70 billion. No higher annual purchase has been recorded. Emerging-economy central banks, including those in China, India and Turkey, are rapidly expanding their Gold reserves.

How does Gold move relative to other assets?

The US Dollar and US Treasuries, both leading reserve and safe-haven assets, tend to move inversely to Gold. A decline in the Dollar generally supports the metal, allowing investors and central banks to diversify holdings during turbulent periods. Gold also has an inverse relationship with risk assets. Rising equity markets typically put pressure on Gold prices, while selling in riskier markets generally benefits the precious metal.

Which factors drive Gold prices?

Many factors can influence Gold prices. Its safe-haven status means geopolitical instability or concerns about a deep recession can trigger rapid gains. Gold pays no yield, so lower interest rates tend to support it, while higher borrowing costs usually weigh on the metal. Most price moves nevertheless depend on the US Dollar (USD), as Gold is quoted in dollars (XAU/USD). Dollar strength generally restrains Gold prices; a weaker Dollar is more likely to lift them.