【TMGM Financial Recap】Gold’s Rebound From Oversold Levels: Crucial Week for Bulls With US Midterm Elections and Nonfarm Payrolls!

2.86% was the Nasdaq’s loss last Friday. That marked its sharpest daily percentage fall since early June and widened the decline from its October 6 record high to 7.8%. A broad technology stock sell-off dominated global markets after Intel and Amazon reported disappointing quarterly results, fuelling doubts over the returns on AI infrastructure spending. Losses reached 28.6% for Intel, 4.2% for Nvidia and 10.9% for AMD. The Philadelphia Semiconductor Index fell 7.2%, leaving it down more than 15% for the month. Gold offered no traditional safe-haven refuge: it faced selling alongside other precious metals as the sharp equity correction spread. Earnings support has been central to the AI rally, but that foundation is starting to show cracks. 

Liquidity can leave gold exposed to forced selling during a technology-led downturn. When falling shares depress fund net asset values and bring margin calls, investors often sell the metal as one of their most liquid assets instead of buying it for safety. Commerzbank highlighted the potential for sharp technology stock declines to force liquidation of safe-haven holdings such as gold and generate margin calls. The bank nevertheless expects precious metal prices to recover. Friday’s decline thus appeared to be driven more by the need to raise cash during an extreme risk event than by a complete collapse of gold’s long-term rationale as a safe haven. 

Gold also faced pressure from the hawkish stance of Federal Reserve officials. At least two further rate hikes of 25 basis points each were required before a pause to assess conditions, the Dallas Fed president argued last Friday. The official considered both current price pressures and inflation’s extended stay above the 2% target unacceptable. Support for additional tightening also came from the St. Louis Fed president. Calling for prompt action, the official argued that gradual adjustments introduced earlier generally prove less disruptive than large, abrupt moves later. 

A target interest rate range of 3.75%–4.00% remained in place following the Fed’s decision earlier last week. The hold followed September’s rate hike, however, and officials broadly signalled that further tightening lay ahead. Gold earns no interest, so an extended period of elevated rates makes holding it more costly in opportunity terms. High real yields apply additional, direct pressure to its valuation. 

Several events will test gold over the coming week, beginning with Tuesday’s midterm elections in the United States. Political uncertainty could generate volatility driven by safe-haven demand. Economic releases will then arrive in sequence: October ISM purchasing managers’ indices, JOLTS job openings, the ADP employment report and initial jobless claims. A key focus will be Friday’s October nonfarm payrolls report. Markets forecast 40,000 new jobs, with unemployment steady at 4.2%. Results from Apple, AMD and Qualcomm will provide a further influence on sentiment towards AI-related trades. Markets currently put the chance of a December rate hike at around 70%. As the December policy meeting approaches, changes in inflation or employment data could alter that pricing. 

Gold Analysis: Rates, AI Stocks and Demand
A recovery in gold, or a further correction, will depend on the Fed’s December rate decision, whether AI technology shares stabilise, and developments in Iran and oil prices. Buying by central banks and demand for safe-haven allocations remain sources of underlying support. The scope for gains is constrained, however, by high interest rates and weak demand in Asia.