Gold builds on post-election gains as USD weakens and bond yields ease

• Above $4,100, Gold builds on its advance as USD selling following the US elections continues unabated.
• With cheaper oil tempering inflation concerns, US bond yields decline and lend further support to the commodity.
• As traders await the US NFP report, expectations of hawkish central bank policy could limit bullion's gains.

After a rise of over 3.5% on the previous day, its largest daily advance since mid-August, Gold (XAU/USD) pushes through $4,100 to a two-week high in Thursday's Asian session. The strong follow-through buying comes as the US Dollar (USD) remains close to the one-month low reached after the US election results, providing a key source of support for the commodity.

A major source of uncertainty has receded following the Democrats' decisive victory in the US midterm elections, while expectations of renewed military strikes against Iran by US President Donald Trump have diminished. On Wednesday, top Senate Democrat Chuck Schumer pledged to press for an end to the Iran war, saying his party could use its control of government funding to pursue that aim. The resulting optimism has pushed crude oil to a two-month low and eased concerns over inflation. US bond yields also face downward pressure from expectations that fiscal deadlock in Washington could constrain government spending. Together, these factors keep the USD under pressure and support the commodity.

Dollar slips only modestly after decisive Democratic victory

Only modest declines in the Dollar and US Treasury yields have followed the election so far, analysts at MUFG/BTMU note. In their assessment, the “scale of the win for the Democrats – which has surpassed any predictions reported prior – has not been matched by the scale of moves in the financial markets,” although they believe the changed political landscape could yet be pivotal for the currency. Should subsequent developments lead markets to reprice policy or geopolitical risks, they argue: “That would certainly reverse the move lower we are seeing now in the dollar and Treasury yields,”. By contrast, MUFG/BTMU suggest that “if Trump does not attack Iran and he sees this repudiation of his policies from voters as reason to seek a deal, an extension of dollar weakness is much more likely,” highlighting the importance of the post-election policy response in determining whether the Dollar's retreat gathers pace or reverses.

The political change has done little to alter expectations of further tightening by the US Federal Reserve (Fed). Traders continue to price in over an 80% probability of a December increase in borrowing costs, according to the CME Group's FedWatch Tool. Reinforcing those expectations, the stronger-than-forecast US ADP report put private-sector employment growth at 86,000 in October 2026, in line with the downwardly revised figure for the previous month. Meanwhile, the Institute for Supply Management's (ISM) Services PMI eased from September's 54.9 to 54.5 last month. It nevertheless stayed above the 50 threshold, signalling continued expansion.

Expectations of rate rises elsewhere could also restrain the advance in non-yielding Gold. At its policy meeting later today, the Bank of England (BoE) is widely expected to increase its main interest rate by 25 basis points (bps). Minutes of the Bank of Japan's (BoJ) September meeting, meanwhile, showed that policymakers discussed the need to continue raising rates, potentially at a faster pace. Markets are also assigning a greater probability to December rate increases by the European Central Bank (ECB) and the Swiss National Bank (SNB). This backdrop calls for some caution before positioning for further gains in the precious metal.

Friday's closely followed US monthly employment release, commonly known as the Nonfarm Payrolls (NFP) report, may give traders reason to hold back in the meantime. Alongside speeches by influential FOMC members, the key figures will be scrutinised for fresh indications of the Fed's policy outlook, shaping near-term demand for the USD. Developments in the Middle East crisis could also generate volatility and give Gold prices further impetus.

XAU/USD advances on the 4-hour chart

Technical outlook remains constructive

Thursday's break above both the 23.6% Fibonacci retracement of the August-October decline and the 200-period Simple Moving Average (SMA) leaves XAU/USD with a constructive bias on the four-hour chart. At 75.77, however, the Relative Strength Index (RSI) signals overbought conditions. The Moving Average Convergence Divergence (MACD) line continues to climb above its signal line, accompanied by a positive and widening histogram. These readings suggest buying pressure remains in place, even though the rally appears mature.

The near-term test is therefore whether buyers can overcome the 38.2% Fibonacci retracement at $4,186 without an overbought correction taking hold. Beyond that, resistance comes at the 50.0% level of $4,283, followed by $4,380. The wider Fibonacci band extending to $4,518 and $4,695 limits the medium-term recovery path. Initial support could come from the 200-period SMA near $4,124 and then the 23.6% level at $4,065. Losing the latter would leave the structural floor around the recent cycle low near $3,871 exposed.

(The technical analysis of this story was written with the help of an AI tool. Know more.)