FX.co ★ XAU/USD, GOLD

The price of gold (XAU/USD) surpassed the psychological $4,000 mark during Wednesday’s European trading session, driven by intraday buying momentum. This move followed preliminary results from the U.S. midterm elections, which introduced political uncertainty into global financial markets and exerted significant downward pressure on the U.S. dollar. The prospect of a Democratic victory in both the House and the Senate raised the likelihood of legislative gridlock in Washington, which could constrain future government spending plans. Market observers noted that such a potential fiscal stalemate might weigh on valuations in the technology sector and broader economic growth, thereby accelerating capital flows into traditional safe-haven assets and driving down U.S. Treasury yields—a combination that directly benefits non-yielding precious metals. Nevertheless, market expectations that the Federal Reserve will maintain a hawkish stance continue to limit gold’s potential for further gains. The CME Group’s FedWatch tool indicates that the market assigns an approximately 80% probability to another 25-basis-point interest rate hike at the Federal Reserve’s December policy meeting. These expectations for monetary tightening were reinforced by the U.S. Department of Labor’s Job Openings and Labor Turnover Survey (JOLTS) report released on Tuesday; the data showed an unexpected rise in job openings to 7.523 million in September, while the figure for August was revised upward to 7.19 million. Against the backdrop of robust overall economic activity and persistently high inflation indicators, strong labor demand data has reinforced expectations that monetary policy will remain tight. This has made it difficult for gold prices to break through the key technical resistance level of $3,970. Meanwhile, although all parties are seeking a diplomatic resolution to the eight-month-long U.S.-Iran conflict, energy and commodity markets continue to factor in geopolitical risk premiums. Despite U.S. President Donald Trump’s statement in an interview with the *Financial Times* that Washington is not currently planning any military action against Iran, the market remains on edge. Iranian officials have previously stated that the strategically vital Strait of Hormuz will not be reopened unless sanctions are lifted and the naval blockade is ended. Furthermore, the Iranian Revolutionary Guard Corps reported that four oil tankers were damaged by mines in waters south of the Strait of Hormuz, heightening market concerns regarding potential disruptions to energy supplies. Rising energy costs could exacerbate secondary inflationary pressures, providing justification for central banks to maintain a hawkish stance. Traders are closely monitoring U.S. economic data due on Wednesday—including the ADP private-sector employment figures and the Institute for Supply Management (ISM) services Purchasing Managers' Index (PMI)—while also awaiting Friday’s key non-farm payrolls report, which is expected to provide clarity on the market's direction. From a technical perspective, on the four-hour chart, the price of (XAU/USD) remains in a downtrend, continuing to trade below the 100-period simple moving average (SMA) and beneath a key Fibonacci retracement level associated with the mid-October decline. The 23.6% Fibonacci retracement level ($3,947) currently acts as resistance, while a stronger supply zone lies around $3,970. Although momentum indicators show signs of stabilization—with the Relative Strength Index (RSI) hovering at a neutral level of 48.94, and the Moving Average Convergence Divergence (MACD) remaining in positive territory at 6.65—the bullish momentum is insufficient to reverse the overall downward trend. For gold prices to shift, a decisive breakout above $3,970 is required; this would open the path toward the 38.2% Fibonacci retracement level ($3,995) and the 50% Fibonacci retracement level ($4,033), with the 100-period SMA (near $4,057) serving as the next major target. Conversely, should selling pressure return, buying interest is expected to emerge at a key Fibonacci support level—around $3,869—where buyers have stepped in previously, preventing further significant declines in gold prices.