Gold Daily Forecast XAU/USD starts the U.S. session weaker at 3914, as oil prices remain volatile and gold tracks those moves. XAU/USD is trading around 3935, down 0.80% today, after falling below key support at 3900 during the Asian session. Oil fell significantly yesterday after Iran's President said the country's Supreme Leader has expanded the government's negotiation capabilities, allowing gold to gain traction and ending yesterday's trade at 1.83%. Yesterday's WSJ report of a U.S. attack on Iran's Qeshm Island supported Oil recovery today. Since the Russia-Ukraine conflict began in late February, the link between oil prices and interest-rate expectations has been a main catalyst behind gold's performance. High energy prices create inflationary pressures, prompting central banks to raise interest rates or tighten monetary policy further, such as the U.S. Federal Reserve (Fed). Higher interest rates create a high opportunity cost for owning a non-yielding asset like gold. In September, the Fed raised interest rates by 25 basis points (bps), paused its tightening cycle in October, and continued sending strong hints of fighting inflation by maintaining a hawkish stance. Based on data from the CME FedWatch Tool, the Fed has a 75 percent probability of raising interest rates again in December. Meanwhile, geopolitical tensions in the Middle East, rising oil prices, and the U.S. Fed's hawkish monetary policy stance continue to support demand, keeping trade from falling back to multi-week lows. However, it remains above the 100 psychological level at 101.86. All this adds headwinds for gold. The precious metal has few avenues left unless crude oil prices fall persistently. However, due to ongoing negotiations between the United States of America and Iran over the latter's uranium program, oil prices do not seem likely to dip anytime soon. This week, traders will focus on several releases on the U.S. employment front. JOLTS Job Openings report kicks off on Tuesday. Furthermore, traders await Nonfarm Payroll employment figures on Friday. Traders also monitor midterm elections on Tuesday. Norman Liebke of Commerzbank suggests that "in case of the Republicans losing majority in either chamber," the dollar "will come under more pressure because the Trump administration will lack sufficient political weightage." Moreover, according to Liebke, "even a switch in power to Democrats only in one chamber will send out some negative signs for the Dollar but not to such an extent as above." At the same time, "if the Republicans manage to hold onto their majority in both houses, it will be positive news for the Dollar." Furthermore, Liebke emphasizes that "developments following the mid-term elections may turn out to be quite important for the dollar" because, in the event of an "escalation of the Iranian crisis" initiated by President Donald Trump, "another strike against Iran might drive up energy costs." This kind of geopolitical tension "may drive risks away" and lead to "risk-off conditions." Consequently, "as a consequence of the Iran war at its very start, the dollar had benefited from safe-haven flows." XAU/USD continues to trade in a bearish trend on the daily timeframe and below the 21-, 100-, and 200-day SMAs. The RSI reading of 34 remains slightly oversold, while the MACD prints negative signals and stays below zero, suggesting downside momentum remains intact despite overextended moves down. Resistance begins around $3,950-$4,000, followed by the 21-day SMA at $4,081. Beyond this barrier, resistance forms at the 100-day SMA at $4,205, with higher horizontal resistance at $4,400. The next resistance is the 200-day SMA at $4,480. Gold prices continue trading under selling pressure, and bears seem strong in numbers. Immediate support occurs at this year's annual low at $3,870. If bears push prices below this level, gold could face deeper corrections.
