FX.co ★ XAU/USD, GOLD

Gold prices (XAU/USD) fell again on Tuesday, falling 0.45% and trading around $3,926. Geopolitical uncertainty, strong US economic data and rising Treasury yields have combined to weigh heavily on non-interest bearing assets. One of the main factors in gold's decline is its current negative correlation with crude oil prices. As tensions escalate in the Middle East, WTI recovered some of its earlier losses, while the US dollar once again highlighted its safe-haven properties. Geopolitical news remains mixed: The New York Times cited warnings from Israeli intelligence services that Tehran may be considering deploying chemical weapons; This is in direct contrast to previous optimistic expectations that a diplomatic solution could be reached between the United States and Iran – a statement that was explicitly denied by Iranian state media (IRIB). At the same time, when the United States released a series of strong economic data, the macroeconomic fundamentals environment for gold became increasingly harsh. The U.S. Bureau of Labor Statistics reported that the number of JOLTS job openings rebounded 4.5% in September, from 7.19 million in August to 7.5 million, and the employment rate also rose slightly to 3.4%. Meanwhile, data from the US Census Bureau showed that factory orders increased by 1.8% month-on-month in September, a strong rebound from the previous growth rate of 0.3%. These stronger-than-expected economic signals sent US Treasury yields higher, with the 10-year US Treasury yield rising 4 basis points to 4.954%; The US Dollar Index (DXY) also recovered from an intraday low of 101.62, trading around 101.78, fundamentally unchanged. Affected by this, the money market adjusted its expectations for monetary policy; The Chicago Mercantile Exchange's (CME) "FedWatch" tool shows that the market expects the probability that the Fed will raise interest rates at its December meeting to rise to 79% from 74% the day before. Demand signals at the institutional level are also mixed: the World Gold Council lowered its full-year gold investment growth forecast from 400 metric tons to 200 metric tons due to weak demand for retail gold bullion and coins; But at the same time, the association raised its expectations for official central bank purchases of gold. In addition to monetary policy, market participants are also paying close attention to the results of the US midterm elections. Forecasting markets like BulliMarket show that the odds for Democrats to win a “sweep” (control of both the House and Senate) are higher – about 95% in the House and 73% in the Senate. Traders are also looking to upcoming economic data, such as ADP Employment Change and ISM Services PMI, to gauge the dollar's next direction.

From a technical perspective, the spot price fell after rebounding on Monday, reflecting that the market is currently in a sideways phase towards downward consolidation; Although the momentum indicator is biased towards the negative, the price trend has not yet reached a new low. The Relative Strength Index (RSI) on the daily chart is moving deeper into the bearish territory, indicating continued selling pressure in the near term. If gold prices actually fall below the key psychological support level of $3,900, they could test this year's low of $3,879 that was set on October 30. If the selling pressure continues, gold prices could fall further towards the long-term horizontal support near $3,500 – a level that was the highest on April 22, 2025. On the other hand, if the bulls can regain the initiative and push spot prices back above the $4,000 mark, initial resistance above will appear at the key trend line area between $4,050 and $4,070, followed by the resistance level formed by the round number mark of $4,100.