Gold’s post-election rally gains momentum as USD and bond yields soften

• Gold pushes further above $4,100. US election-driven USD selling continues without let-up.
• Lower oil prices temper inflation concerns and push US bond yields down, giving the metal additional support.
• With traders awaiting US NFP data, hawkish central bank expectations may limit bullion's upside.

Gold (XAU/USD) has broken above $4,100. Strong follow-through buying lifted the metal to a two-week high in Thursday's Asian session, extending the previous day's gain of over 3.5% – its largest daily advance since mid-August. A key source of support is the US Dollar (USD), which remains close to the one-month low reached after the US election results.

A major uncertainty has lifted following the Democrats' overwhelming US midterm election victory. The result also reduced expectations that US President Donald Trump would restart military strikes against Iran. On Wednesday, top Senate Democrat Chuck Schumer pledged to seek an end to the Iran war, saying his party could leverage control of government funding to pursue that objective. The resulting optimism has driven crude oil to a two-month low and eased inflation concerns. Expectations that fiscal gridlock in Washington could restrain government spending are also weighing on US bond yields. That pressure keeps the USD subdued and supports the metal.

Democratic Victory: Dollar and Treasury Yields Only Modestly Lower

Only modest declines in the Dollar and US Treasury yields have followed the result so far. MUFG/BTMU analysts note that the “scale of the win for the Democrats – which has surpassed any predictions reported prior – has not been matched by the scale of moves in the financial markets,” while arguing that the changed political landscape could yet be decisive for the currency. If later developments prompt markets to reprice policy or geopolitical risks, they say: “That would certainly reverse the move lower we are seeing now in the dollar and Treasury yields,”. In contrast, MUFG/BTMU suggest that “if Trump does not attack Iran and he sees this repudiation of his policies from voters as reason to seek a deal, an extension of dollar weakness is much more likely,” highlighting the role of the post-election policy response in determining whether the Dollar's retreat extends or reverses.

The political change has done little to alter expectations of further US Federal Reserve (Fed) tightening. Traders continue to assign over an 80% probability to a December increase in borrowing costs, according to the CME Group's FedWatch Tool. A stronger-than-expected US ADP report reinforced those expectations: private-sector employment rose by 86,000 in October 2026, equalling the downwardly revised figure for the previous month. In a separate release, the Institute for Supply Management's (ISM) Services PMI slipped from September's 54.9 to 54.5 last month. It nevertheless stayed above the 50 threshold, signalling continued expansion.

Rate-rise expectations elsewhere could also constrain non-yielding Gold. At its policy meeting later today, the Bank of England (BoE) is widely expected to lift its main interest rate by 25 basis points (bps). Minutes of the Bank of Japan's (BoJ) September meeting, meanwhile, showed policymakers discussing the need to keep raising rates, potentially at a faster pace. Markets are also assigning a higher probability to December rate increases by the European Central Bank (ECB) and the Swiss National Bank (SNB). Together, these expectations warrant caution before positioning for further gains in the precious metal.

Friday's closely watched US monthly employment release, commonly known as the Nonfarm Payrolls (NFP) report, may keep traders on the sidelines until then. Markets will scrutinise those key figures and speeches by influential FOMC members for guidance on the Fed's future policy course, shaping near-term USD demand. Developments in the Middle East crisis could also generate volatility and give Gold prices fresh impetus.

4-hour XAU/USD Chart

23.6% Fibonacci Breakout Supports XAU/USD Technical Outlook

Thursday's break above both the 23.6% Fibonacci retracement of the August-October decline and the 200-period Simple Moving Average (SMA) leaves XAU/USD with a positive bias on the four-hour chart. At 75.77, however, the Relative Strength Index (RSI) signals overbought conditions. The Moving Average Convergence Divergence (MACD) line continues to rise above its signal line, accompanied by an expanding positive histogram. These indicators suggest buying pressure remains in place, although the rally appears mature.

Attention now turns to $4,186, the 38.2% Fibonacci retracement: can buyers break through without overbought conditions prompting a correction? Above that, resistance lies at the 50.0% level of $4,283, followed by $4,380. The wider Fibonacci band extending to $4,518 and $4,695 limits the medium-term recovery path. Initial downside support could come from the 200-period SMA near $4,124 and then the 23.6% retracement at $4,065. A breach of the latter would bring the structural floor near the recent cycle low of $3,871 into view.

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