Despite strong US NFP data, gold recovers above $4,100

• Gold regains ground near $4,100 as early Asian trading gets under way on Monday.
• Hopes of an end to the Iran war gather strength following the US midterm elections.
• October’s US NFP increase exceeds market expectations.

Renewed support lifts Gold price (XAU/USD) towards $4,100 in Monday’s early Asian session, helping it recoup part of its losses. The recovery comes amid speculation that incoming Democrats would press for an end to the Iran war.

Having won majorities in both the House and Senate, Democrats are firmly resisting US President Donald Trump’s proposed $1.5 trillion defence budget and appear intent on blocking it, Bloomberg reported.

According to a source familiar with the discussions, Democrats are likely to approve only around $1 trillion in defence spending. They are keen to avoid being seen as endorsing further funding for the war against Iran.

Further gains in the precious metal could, however, be limited if robust US employment figures strengthen the US Dollar (USD) and lift Treasury yields. Friday’s release from the US Bureau of Labor Statistics (BLS) showed that the economy created 165,000 jobs in October, up from 60,000 in September and above the forecast of 65,000. Meanwhile, the Unemployment Rate declined from September’s 4.2% to 4.1% in October.

Expectations that the Federal Reserve (Fed) could maintain higher interest rates for longer gained support from the stronger-than-forecast US payrolls figures. Since gold pays no yield, higher rates raise the opportunity cost of holding it and reduce its appeal to investors.

According to the CME FedWatch tool, traders now assign a roughly 79.6% probability to a December rate increase by the Fed, up from 72.8% ahead of the US employment release.

Independent metals trader Tai Wong said: "Gold gapped lower on a stellar employment report (that was) strong across the board, but is trying to claw back higher. This is a litmus test for this week's rally,"

Can Gold Retain Its Safe-Haven Appeal as Equities Sell Off?

A rebound in oil prices and a degree of stabilisation in the Dollar restrained gold’s upward momentum, according to OCBC analysts, who observe that the metal “pared earlier gains after rising to a two-week high above 4140 at one point overnight,” although “softer US Treasury yields continued to lend support.” Urging caution in the near term, they point out that “the deepening selloff in AI and semiconductor stocks warrants some near-term caution,” and warn that “should equity weakness trigger broader deleveraging, gold may not be spared from liquidity-driven selling as investors raise cash.”

Despite those risks, OCBC takes encouragement from the metal’s performance, noting that “gold’s relative resilience despite the sharp equity selloff is encouraging.” The analysts believe that “following the recent correction and reduction in speculative positioning, gold may be gradually regaining some of its safe-haven appeal, potentially providing shelter amid turbulence elsewhere in financial markets,” while cautioning that “the extent to which gold can hold up if equity weakness persists will be an important test.”

With near-term economic releases approaching, OCBC’s assessment is that “some consolidation remains likely ahead of US payrolls report tonight.” A weaker jobs reading could support a further recovery, with the analysts arguing that “softer employment data could further temper Fed tightening expectations, weigh on yields and USD, and allow gold’s recovery to extend,” and identifying “next Tuesday’s US CPI” as “another key test, while oil prices remain an important driver of inflation and rate expectations.” Turning to the technical picture, they observe that “gold last seen at 4088 levels,” and that “daily momentum turned mild bullish but rise in RSI moderated,” leading them to conclude that “consolidation [is] likely after the recent sharp rebound.”

Technical Analysis: Can Gold Break Above the 100-day SMA?

With spot prices still trading beneath the 100-day simple moving average (SMA), the daily XAU/USD chart retains a broadly bearish near-term outlook. Some underlying buying interest is evident as prices stay slightly above the middle line of the 20-day Bollinger bands. However, the nearby upper band points to substantial overhead resistance. At 50.30, the Relative Strength Index (RSI) remains close to neutral, indicating that the recent recovery lacks the momentum needed to decisively challenge the resistance above.

The first upside hurdle is the 100-day SMA at $4,200, ahead of the upper Bollinger band near $4,225. Bulls would have to regain this zone to reduce the prevailing bearish bias. Initial downside support lies around the current price area of $4,095, while the middle Bollinger band at $4,065 provides a base for the short-term range. A steeper decline would bring lower-band support near $3,900 into view, a level at which sellers could turn more cautious.

(The technical analysis of this story was written with the help of an AI tool. Learn more.)