Oil’s retreat eases pressure on gold as traders await key US economic data

Gold opens the week higher, supported by lower Oil prices as US-Iran diplomacy resumes.
Expectations of a hawkish Fed and lingering inflation worries keep Gold's gains in check.
With the RSI nearing oversold levels, XAU/USD retains a bearish technical bias.

$3,870 marked a fresh yearly low for Gold (XAU/USD) on Friday. The metal finished October down 6.87% but opens the new week higher. Renewed US-Iran diplomatic efforts have pulled Oil prices lower, providing support for Gold. Yet the recovery remains unconvincing, with underlying fundamentals still casting doubt on its staying power.

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

Iran’s Foreign Ministry spokesman Esmaeil Baghaei said on Monday: “Exchange of messages with the US continues,” adding that Deputy Foreign Minister Kazem Gharibabadi was in Doha to help advance the process. According to Iran, its proposal could allow the Strait of Hormuz to reopen within two days of an agreement, conditional on Washington lifting its naval blockade and meeting Tehran’s demands. West Texas Intermediate (WTI) falls below $100 a barrel, losing around 3% on the day.

Around 30% now separates Gold from its January all-time high near $5,600. The metal has generally traded inversely to Oil since the US-Iran war started in late February. Higher energy costs pushed inflation up, leading central banks, especially the Federal Reserve (Fed), to tighten monetary policy.

Although inflation and geopolitical uncertainty usually stimulate Gold demand, the threat of higher interest rates is proving more influential this time, weighing on the non-yielding metal. Nor has the AI-led technology sell-off provided support. Despite the associated declines in the US Dollar (USD) and Treasury yields, traders have sold Gold to cover margin calls and losses in other positions.

After earlier reaching a one-week low of 101.44, the US Dollar Index (DXY) stands around 101.70, a daily decline of 0.27%. The index measures the Greenback against a basket of six major currencies. At the same time, the benchmark 10-year US Treasury yield remains close to a seven-week low around 4.91%. That is well below October’s peak of 5.36%, the highest since 2002.

3 November elections and US data in focus

3 November brings the US midterm elections. The outcome could move the US Dollar and, consequently, Gold. A packed economic calendar will also give traders fresh signals on the Fed’s rate trajectory. The ISM Manufacturing Purchasing Managers Index (PMI) is due on Monday, with JOLTS Job Openings following on Tuesday. Wednesday brings ADP Employment Change and the ISM Services PMI, before Friday’s Nonfarm Payrolls (NFP) report.

A 10-2 vote in October kept Fed interest rates at 3.75%-4.00%, after September’s 25-basis-point (bps) rise. The decision reflected a patient approach to tackling inflation. CME FedWatch shows traders assigning a 72% probability to a December rate increase.

US midterm elections: key questions

US midterm elections: what voters decide

Halfway through a president’s four-year term, the US holds federal elections known as the midterms. All 435 House of Representatives seats and about one-third of Senate seats are contested. In many states, voters also elect governors and other state and local officials.

2026 midterm elections: the voting date

Tuesday, 3 November 2026 is Election Day. Under federal law, voting takes place on the Tuesday following November’s first Monday. Many states already have early and postal voting under way.

US midterms: congressional control at stake

Control of both chambers of Congress for the final two years of President Donald Trump’s term will be determined by these elections. Each chamber’s majority party directs its legislative agenda and selects committee leaders. In the Senate, it also oversees confirmations of judges and senior officials.

2026 midterms: no presidential contest

The president is not on the ballot. Presidential elections take place every four years, with the next scheduled for November 2028. Often regarded as a verdict on the incumbent president’s party, midterms have historically tended to cost that party seats in the House.

2026 midterms: potential US dollar impact

A limited, temporary US Dollar response is what most analysts anticipate, rather than a durable trend. Markets have partly priced in a divided Congress, the widely expected base case. The effect on Treasury yields could be more pronounced. Results that increase expectations for fiscal stimulus typically push yields and the US Dollar higher; gridlock that curbs additional spending can lower both. Disputes over funding or the debt ceiling can also briefly support safe-haven demand for the Dollar. Across six to twelve months, however, economic growth and Federal Reserve policy carry more weight than the election result.

Midterm elections: historical stock performance

Historically, US equities have tended to struggle ahead of midterms and strengthen afterwards. Since 1950, the S&P 500 has recorded a gain 12 months after each midterm election: 19 out of 19, averaging about 15%. Analysts attribute this pattern to the removal of uncertainty once the outcome is clear. Past performance does not guarantee future returns, and some strategists caution that elevated valuations in 2026 could challenge that record.

Divided Congress: market benefits and risks

Divided government has frequently been well received by markets, as legislative gridlock reduces the likelihood of major changes in taxation, spending and regulation. With a Republican president in office, the S&P 500 has historically performed well in the years after midterms that divide control of Congress. Funding deadlines, debt-ceiling disputes and congressional investigations remain risks that can increase short-term volatility.