Gold advances to near $4,100 as markets await US NFP data

• At around $4,085, Gold trades higher in early Asian dealings on Friday.
• Easing inflation worries amid a softer US Dollar and cheaper oil lend support to Gold.
• Friday’s US employment figures for September will be the focus for markets.

Near $4,085, Gold (XAU/USD) reaches its highest level in more than two weeks in early Asian trading on Friday. A softer US Dollar (USD) and declining oil prices underpin the advance, while traders await Friday’s US September employment report for indications of the interest-rate outlook.

Following the Democrats’ sweeping victory in the US midterm elections, the precious metal has extended its gains. Oil fell sharply as the Democratic sweep of Congress fuelled speculation that the election result would hasten an end to the Iran war. Investors also scaled back bets on interest-rate increases by the US Federal Reserve (Fed).

David Meger, director of metals trading at High Ridge Futures, said: “It’s not that at this point rate hike expectation has completely disappeared,” adding: “As we’ve seen the weaker energy prices, there’s an expectation that we will see some fears of inflation subside and the potential for a lesser need for rate hikes ‌down the road,”

According to CME’s FedWatch tool, market pricing now implies nearly a 70.9% chance of a Fed rate increase in December. Holding gold, which pays no yield, becomes more costly in opportunity-cost terms when interest rates rise.

With Friday’s US labour market release potentially shedding light on the central bank’s policy path, attention turns to the employment figures. September Nonfarm Payrolls (NFP) are forecast to rise by 65,000, alongside an unchanged Unemployment Rate of 4.2% for the same period. Evidence of a stronger US labour market could support the Greenback and put near-term pressure on the dollar-denominated commodity.

Gold gains support from a weaker USD and falling yields

In their assessment of the post-election moves, OCBC strategists say that "precious metals rebounded sharply following the US midterm elections, supported by a softer USD, lower US Treasury yields and oil prices as markets reassessed the implications of political gridlock for US fiscal policy and growth." They note that "gold rallied around 3%, reclaiming the 4000 level," as expectations that political gridlock could limit fiscal expansion and dampen US growth offered "some relief to yields," adding that "slippage in oil prices also lent support."

On gold’s response to the macroeconomic environment, OCBC observes that, "encouragingly, gold has started to respond more positively to a favourable macro backdrop, following its earlier reluctance to benefit from lower yields and USD weakness." Although "cautiously optimistic that gold may be finding its footing," the bank cautions that "further gains would likely require some moderation in Fed tightening expectations and continued recovery in investment demand." In assessing whether buying interest can be sustained, the strategists say they "continue to monitor real yields, USD direction, oil prices and ETF flows for signs of sustained buying interest," and identify "Friday’s US payrolls" as "another important test."

Technical Analysis: Gold faces resistance below the 100-day SMA

The daily chart shows spot XAU/USD holding just above the 20-day Bollinger middle band but still below the 100-day simple moving average (SMA), leaving near-term upside constrained. Against the broader backdrop of elevated prices, this pattern points to a corrective phase. A Relative Strength Index (RSI) reading of 49.63 indicates neutral to mildly positive momentum, insufficient so far to test the prevailing overhead trend barrier.

The 100-day SMA at $4,200 provides the first resistance level. A break above it would bring the upper Bollinger band near $4,250 into view as the next obstacle for buyers. Initial support lies around $4,070 at the 20-day Bollinger middle band, followed by the lower Bollinger band near $3,895. A decisive fall through that lower level would likely intensify short-term bearish pressure.

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