Gold retakes $4,000 as USD sinks following US midterm sweep and Oil tumbles

• From a daily low of $3,919, Gold rebounds to trade above $4,000.
• A six-basis-point decline takes the US 10-year Treasury yield to 4.904%.
• Ahead of NFP, the probability of a December Fed rate rise stays high at 79%.

At $4,047, Gold (XAU/USD) is up nearly 3% on Wednesday, having recovered from a daily low of $3,919. The advance followed a sharp fall in the Greenback after the Democrats swept the US midterm elections. Attention now turns to Friday’s release of October’s Nonfarm Payrolls figures.

XAU/USD climbs nearly 3% as weaker US Dollar and lower Treasury yields support Gold’s rebound

Having recouped some earlier losses, Wall Street is now trading higher. Concerns that tighter regulation of artificial intelligence (AI), potentially including a ban on data centres, could drag on the economy persist as the preliminary US GDP reading for Q3 reaches the 3% threshold.

A weaker US Dollar (USD) has encouraged demand for bullion, helping the metal recover from the year-to-date (YTD) low of $3,870 reached on 30 October.

According to analysts, a Congress dominated by Democrats could weigh on GDP. Some proposals from the administration might be blocked, potentially slowing the economy.

At 54.5, October’s ISM Services Purchasing Managers Index (PMI) fell short of the 54.8 forecast and September’s 54.9 reading. The US figures indicated continued growth in services-sector business activity, albeit at a more moderate pace. The survey’s employment component increased, whereas new orders and prices paid eased but stayed in expansionary territory.

With companies adding 86K workers against a forecast of 69K, October’s ADP Employment Change report indicated that private-sector recruitment remained steady.

Following the election, oil prices eased as expectations grew that the US Congress might remove US President Trump’s war powers. Such a move would not come before the Democratic wave takes over in January 2027. West Texas Intermediate (WTI) is trading at $87.50 per barrel, down more than 8%.

Meanwhile, the probability of a 25-basis-point interest rate increase by the Federal Reserve (Fed) in December stands at 79%. That prospect weighs on Gold, which typically benefits from a low-interest-rate environment.

Lower US Treasury yields are nevertheless helping Gold advance, with the yield on the US 10-year Treasury note falling 6 basis points to 4.904%.

Before Friday’s main event, the Nonfarm Payrolls release, traders will focus on Thursday’s jobless claims figures and speeches from Fed officials.

XAU/USD technical outlook: Gold regains $4,000 as $4,100 comes into focus

Although Gold’s market structure still points to a downtrend, buying momentum is strengthening as the price approaches an important resistance trendline. Following a parabolic rise towards the neutral 50 level, the Relative Strength Index (RSI) is close to turning bullish.

A recovery above $4,100 would put XAU/USD on course to test the confluence of its 100-day and 50-day Simple Moving Averages (SMAs), at $4,204 and $4,215 respectively. Clearing that area would bring the 200-day SMA at $4,474 into view.

A resumption of Gold’s downtrend requires a break below $4,000. That would leave the 3 November high, now support at $3,971, exposed, followed by the 30 October year-to-date low of $3,879. Beyond that lies the daily high of 22 April 2025, which has become support at $3,500.