$4,000 in sight as Gold recovers, with Iran peace hopes driving Oil and US Dollar lower

Over 2% higher: Gold reaches $3,954 as US Dollar losses gather pace.
4.871%: US 10-year Treasury yields fall nearly six basis points.
December Fed rate-rise probability stays around 75% despite firmer US manufacturing activity.

Gold (XAU/USD) is trading at $3,954 at the time of writing. Monday’s rebound exceeds 2% as softer crude prices weigh on the US Dollar (USD). The Dollar’s decline reflects its positive correlation with oil, with elevated energy costs putting upward pressure on inflation.

XAU/USD advances as lower energy costs and Treasury yields renew demand for Gold

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Growing speculation about a diplomatic resolution to the US-Iran conflict has sent oil prices sharply lower. According to reports, Iran’s supreme leader gave President Masoud Pezeshkian “certain authorities” over peace negotiations. Reports that US President Donald Trump favours a peaceful settlement have strengthened risk appetite. That has weighed on the Greenback, which typically benefits from high interest rates and its safe-haven status.

At 101.68, the US Dollar Index (DXY) has fallen 0.27%. The index tracks the Dollar against six currencies. US Treasury yields have also eased, with the 10-year yield down nearly 6 basis points at 4.871%.

October’s Institute for Supply Management (ISM) Purchasing Managers’ Index (PMI) rose to 55.5 from 54.5 in the US, beating the 54.6 forecast. Within the report, the Prices Paid component declined to 75.2 from 77.9, while the employment measure also softened during the month.

Traders have scaled back hawkish positions compared with a week earlier, despite business activity posting its second-highest reading in more than four years, signalling solid economic expansion. The CME FedWatch Tool puts money-market pricing for a December rate increase at 75%, against 80% a week ago.

US calendar: Midterm elections and key data ahead

Tuesday brings the US midterm elections, Factory Orders and the Job Openings and Labor Turnover Survey (JOLTS). Traders are also watching speeches from Federal Reserve officials.

$3,900 reclaimed: XAU/USD technical recovery remains incomplete

Gold has rebounded from its yearly lows, and its trend remains upwards, although the Relative Strength Index (RSI) indicates that buyers are building momentum. After recovering from below $3,900 to current spot levels, XAU/USD still trades beneath $3,975. That latest cycle low, the October 23 low of the day (LOD), now acts as resistance.

A completed bullish reversal requires buyers to clear the October 23 LOD and then the psychological $4,000 mark. Above $4,000, Gold would encounter a key resistance trendline around $4,050-$4,070 before reaching $4,100.

A break below $3,900 is needed for bearish continuation. Such a decline would bring the October 30 yearly low of $3,870 into view, followed by $3,500, where the daily high recorded on 22 April 2025 has become support.

Gold: Key questions

What attracts investors to Gold?

Widely used to preserve wealth and facilitate exchange, Gold has held an important place throughout human history. Today, its appeal extends beyond its lustre and use in jewellery. Investors commonly regard the precious metal as a safe-haven asset, or a suitable investment during periods of turbulence. Its independence from any particular issuer or government also underpins its widespread use as a hedge against inflation and currency depreciation.

Which buyers hold the most Gold?

The largest holders of Gold are central banks. To support their currencies during unsettled periods, they typically diversify reserves and purchase Gold, reinforcing perceptions of economic and currency strength. Substantial Gold reserves can bolster confidence in a country’s solvency. World Gold Council figures show that central banks increased their reserves by 1,136 tonnes in 2022, worth approximately $70 billion. No larger annual purchase has been recorded. Emerging-economy central banks, including those in China, India and Turkey, are rapidly building their Gold reserves.

How does Gold move relative to other assets?

Both major reserve holdings and safe-haven assets, the US Dollar and US Treasuries generally move inversely to Gold. Dollar weakness tends to lift Gold, giving investors and central banks a way to diversify holdings in turbulent periods. Gold also has an inverse relationship with risk assets: equity-market gains typically weigh on the metal, whereas selling in riskier markets tends to support it.

Which factors drive Gold prices?

A broad range of influences can shift Gold prices. Its safe-haven role means geopolitical instability or concerns about a deep recession can trigger rapid gains. Because Gold offers no yield, lower interest rates tend to support it, while higher borrowing costs usually weigh on the metal. Nevertheless, the US Dollar (USD) drives most price movements because Gold is quoted in dollars (XAU/USD). Dollar strength generally restrains Gold prices; a weaker Dollar is more likely to lift them.