Gold reclaims $4,000 as US midterm sweep sinks USD, Oil plunges

• Gold rallies above $4,000 after rebounding from daily lows of $3,919.
• US 10-year Treasury yields drop six basis points to 4.904%.
• December Fed hike odds remain elevated at 79% ahead of NFP.

Gold (XAU/USD) rallied near 3% on Wednesday as the Greenback tumbled following the Democrats' sweep in the US midterm elections. Markets now look ahead to the release of October’s Nonfarm Payrolls data on Friday. The XAU/USD trades at $4,047, after bouncing off daily lows of $3,919.

XAU/USD surges nearly 3% as US Dollar weakness, falling Treasury yields fuel Bullion's recovery

Wall Street is trading in the green, reversing some of its earlier losses. Fears of tighter regulation of artificial intelligence (AI), including a potential ban on data centers, could weigh on the economy, with the preliminary Q3 US GDP reading hitting the 3% threshold.

The depreciation of the US Dollar (USD) boosted the appetite for Bullion, which has recovered after hitting a year-to-date (YTD) low on October 30 at $3,870.

Analysts have argued that a Democratic-dominated Congress could be negative for GDP since some of the administration's proposals might get blocked, possibly leading to an economic slowdown.

US data showed that services-sector business activity continued to expand, although at a slower pace. The ISM Services Purchasing Managers Index (PMI) for October came in softer than expected at 54.5, down from 54.9 a month earlier and below the 54.8 estimate. Within the survey, the employment sub-component rose, while new orders and prices paid declined but remained in expansionary territory.

The October ADP Employment Change report showed private hiring holding steady as companies added 86K workers — above the 69K forecast.

Oil prices edged lower after the election amid growing expectations that the US Congress may strip US President Trump of his war powers, but not until the Democratic wave takes over in January 2027. West Texas Intermediate (WTI) is down more than 8% at $87.50 per barrel.

In the meantime, expectations that the Federal Reserve (Fed) will raise interest rates in December are at 79% for a 25-basis-point move. This is negative for Gold, which usually performs well amid low-interest-rate scenarios.

The fall of US Treasury yields, however, supports Gold’s rise. The US 10-year Treasury note drops by 6 basis points, yielding 4.904%.

Traders' eyes shift to the release of jobless claims and speeches by Fed officials on Thursday, followed by the highlight on Friday: the release of Nonfarm Payrolls data.

XAU/USD technical outlook: Gold reclaims $4,000, eyes on $4,100

Per market structure, the Gold trend remains downward, but buyers are gaining momentum as the price nears a key resistance trendline. The Relative Strength Index (RSI) is about to turn bullish after staging a parabolic jump toward its 50-neutral level.

If XAU/USD reclaims $4,100, this clears the path to challenge the confluence of the 100-day and 50-day Simple Moving Averages (SMAs) at $4,204 and $4,215, respectively. Once cleared, the next stop is the 200-day SMA at $4,474.

For a bearish continuation, Gold must drop below $4,000. A breach of the latter will expose the November 3 high-turned-support at $3,971, then the October 30 year-to-date low of $3,879, and finally the April 22, 2025 daily high-turned-support at $3,500.