Gold Steadies Near $3,943 as Falling Oil Eases Inflation Fears

Key Takeaways

• XAUUSD traded near $3,943.01 on 3 November, retaining part of its recovery from $3,870.
• Spot gold rose more than 2% at one stage on 2 November as oil prices fell amid US–Iran diplomatic efforts.
• Lower energy prices eased inflation concerns and some expectations of further monetary tightening.
• The US midterm elections, US jobs data and US–Iran negotiations could shape the next move.
• Traders are watching $3,960–$3,970 for a potential recovery breakout and $3,940 for further downside risk.

Gold is holding part of its rebound after the previous session’s sharp gains. By early Tuesday it remained above the one-year low near $3,870 but had pulled back from its rebound highs.

Why Traders Are Watching Gold

The immediate focus is whether the rebound from the recent low can develop into a sustained recovery. Falling oil prices have eased inflation concerns, but gold’s next move depends partly on whether Treasury yields and the US dollar also decline.

The calendar adds further uncertainty. Today’s US midterm elections could shift expectations for fiscal policy and broader market sentiment, while Friday’s US jobs report could reshape expectations for the Fed’s December decision. Developments in US–Iran negotiations could also influence energy prices.

Key factors influencing gold’s outlook include:

• US Midterm Elections (3 November): Whether the outcome changes expectations for government spending, taxation and fiscal policy.
• US Non-Farm Payrolls (6 November): Whether October hiring, unemployment and wage growth reshape rate expectations.
• US–Iran Negotiations: Whether a breakthrough or setback alters oil prices and inflation expectations.
• FOMC Meeting (8–9 December): Whether updated economic projections change the policy outlook.

Key Trading Levels

Gold is consolidating within a rebound inside the preceding decline. Holding around $3,940 would help preserve the consolidation, although a recovery remains unconfirmed.

A sustained break above $3,960–$3,970, followed by a successful retest, could open a move towards $3,980. Continued buying could then bring $4,000 into focus, with $4,020 and $4,040 beyond that if higher lows develop.

However, a break below $3,940, following a failure around $3,960–$3,970, could expose $3,920 and then $3,900–$3,910. A sustained break below $3,900 that fails to reclaim the area would suggest further weakness towards $3,880–$3,870, with $3,850 in focus if the recent low breaks.

Bottom Line

Gold’s direction depends on how jobs data, yields and the dollar respond. Weaker employment or wage data, or continued US–Iran progress that keeps oil falling, could reduce expectations of further Fed tightening and support gold. Stronger employment data, renewed oil gains or a diplomatic setback could add pressure, though a setback may produce a mixed reaction as safe-haven buying competes with tighter policy expectations.

For the full technical analysis and potential scenarios, read the full article.