Gold (XAU/USD) Daily Outlook Update Gold (XAU/USD) price recovers to reach nearly $3,895 in the opening Asian session on Monday. Gold gains slightly after dropping to a low of $3,870 in the last session. But upside looks capped because higher crude oil prices, along with inflation fears, have increased the likelihood of a rate hike in the US. This latest fall came on anticipation of another potentially hectic week, likely marked by tensions in the Middle East, US employment data, and US midterm election results. The Guardian stated that Ukraine has resumed attacks on Russia's oil refineries despite threats from US President Donald Trump before the US midterm elections, thus ending a break of almost two weeks in these types of attacks. Additionally, Iran's Supreme Leader has told his senior military officials to be prepared for a confrontation with the United States and Israel. Although the Fed did not change interest rates in October, the US central bank remains determined to reduce inflation. Currently, the CME FedWatch tool shows a 72.9% probability of an interest rate increase in December. Higher interest rates imply a higher opportunity cost of non-yielding gold. "Whether there are new incoming numbers in the economy that cause the markets to rethink the interest rate situation, with expectations towards a hold or reduction in interest rates, is going to be key. Unless that happens, gold may be expected to keep getting sold despite favorable factors that sustain its outlook for the medium to long term," said Simon-Peter Massabni, Head of Business Development at XS.com. OCBC strategists point out the failure of the latest rebound in gold, where prices "are slipping back towards lows of 4000 despite a little relief in US Treasury yields and oil prices." "September core PCE came in largely as expected at 3.1% YoY, while 3Q26 GDP numbers helped reinforce the US economy's robustness," which, according to strategists, "provided little impetus for market participants to reduce expectations of a Fed rate hike in December after this week's Fed policy decision." More importantly, OCBC strategists say that "the lack of support for gold in lower yields indicates that new buying enthusiasm still lacks, albeit earlier selling pressure may be diminishing." Moreover, "a renewed sell-off in technology stocks also added pressure on sentiment amid rising worries about the potential of broader deleveraging." In this context, OCBC remarks that "We maintain a cautious stance in the near-term, with more consolidation or another attempt to retest recent lows on the cards." Also, OCBC notes that "Friday's Employment Cost Index and equity/ yield /USD performance will be critical to keep an eye on." Logan of the Fed gave a very hawkish speech, as shown by its score of 8/10 in the FXS Speechtracker, just slightly above the historical average of 7.7/10. The statement that the Fed "needs at least two more quarter-point rate hikes" and that the omission of a meeting will not change the policy direction shows a firm determination of the speaker regarding the necessity of the restrictive policy, especially taking into account that inflation is still considered "unacceptable" in comparison to the 2% target level. The focus on gradual policy adjustment and a clear view of the rate destination aims to avoid downside risks while allowing households, corporations, and investors to adjust to rising Dollar interest rates against a backdrop of solid growth and a balanced labor market. The FXS Fed Sentiment Index rose 0.95 to 143.62, indicating a hawkish stance as it reflects Logan's expectations of further tightening, though a break is possible for several reasons. On the daily chart, XAU/USD remains below all major reference levels and the 100-day simple moving average (SMA), putting downward pressure on the precious metal. It is trading below the Bollinger Bands' middle line and even below the lower band, showing a clear breakout. At the same time, the Relative Strength Index (14) at 32 sits just above the overbought level, indicating exhausted bearish momentum. As for upside resistance, it starts at the lower Bollinger band of $3,910 and continues to the mid-Bollinger band of $4,085, which represent the first hurdles for the gold price's recovery attempt. Above that are the 100-day SMA of $4,210 and the upper Bollinger band of $4,265, which would put a tight cap on gold.
