Gold slips to around $3,900 as US yields climb and hawkish Fed bets strengthen

Gold retreats to nearly $3,900 as uncertainty resurfaces in the Middle East.
A four-basis-point rise takes US 10-year Treasury yields to 4.954%.
Odds of a December Fed rate hike increase to 79%, intensifying pressure on gold.

Gold price (XAU/USD) comes under pressure on Tuesday, trading 0.45% lower at $3,926 at the time of writing. With geopolitical tensions still elevated in the Middle East, Oil prices have pared earlier losses. Their positive correlation with the US Dollar has strengthened the currency’s safe-haven appeal.

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

Can XAU/USD withstand an Oil recovery, stronger US data and elevated Treasury yields?

Gold remains weighed down by uncertainty over the outcome of the US-Iran conflict, reflecting its current negative correlation with West Texas Intermediate (WTI), the US crude benchmark. Amid conflicting headlines, the New York Times reported that Israeli intelligence had shared information that Iran was considering using chemical weapons.

Reports earlier suggested Washington and Tehran were nearing a deal. Iran, however, rejected those claims, according to the IRIB news agency.

US job vacancies increased in September, the Job Openings and Labor Turnover Survey (JOLTS) showed. At 7.5 million, openings were up from 7.19 million, a 4.5% rise over the previous month. The hiring rate increased to 3.4% from 3.3%, while the total separations rate held steady at 3.3%.

Separately, the US Census Bureau reported that Factory Orders grew 1.8% MoM in September, compared with 0.3% MoM in the preceding month.

Against this backdrop, the US Dollar regained some ground after the US Dollar Index (DXY) touched an intraday low of 101.62. Tracking the currency against six peers, the DXY is broadly flat at 101.78.

Besides pressure from the US Dollar, rising US Treasury yields are driving bullion prices lower. The yield on the 10-year T-note has gained 4 basis points to 4.954%.

Higher expectations of a December Federal Reserve (Fed) rate hike are also keeping XAU/USD under bearish pressure. According to the CME's FedWatch Tool, traders now assign a 79% probability to a hike, compared with 74% a day earlier.

Citing softer demand for bars and coins, the World Gold Council cut its Gold investment growth forecast from 400 metric tons to 200 metric tons. It nevertheless increased its estimate for purchases by central banks.

The US midterm elections are also in focus for commodity traders. Prediction sites such as Polymarket put the odds of Democrats regaining a House majority at nearly 95%. Their chances in the US Senate stand near 73%, which would give the Democrats a sweep.

Wednesday’s releases will also draw attention, with the ADP Employment Change report and October’s ISM Services Purchasing Managers’ Index (PMI) on the calendar.

XAU/USD technical outlook: Can Gold hold $3,900 as its recovery loses momentum?

Although XAU/USD has pulled back following Monday’s gains, it has not made a lower low, pointing to range-bound trading. The Relative Strength Index (RSI), however, shows momentum drifting lower towards bearish territory, suggesting further downside in the near term.

A break below $3,900 would open the way for Gold to test the year-to-date low of $3,879 recorded on 30 October. Below that lies $3,500, the daily high of 22 April 2025, which has since become support.

Conversely, a move by buyers to regain $4,000 would bring a key resistance trendline near $4,050-$4,070 into focus, followed by $4,100.

Gold: Frequently asked questions

What attracts investors to Gold?

Widely used as both a store of value and a medium of exchange, Gold has held an important place throughout human history. Beyond its lustre and use in jewellery, the precious metal is now widely regarded as a safe-haven asset, or an investment considered attractive during periods of turmoil. Since it does not depend on a particular issuer or government, Gold is also commonly viewed as a hedge against inflation and currency depreciation.

Which buyers hold the largest Gold reserves?

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 data show that central banks increased their reserves by 1,136 tonnes of Gold, valued at around $70 billion, in 2022. That marked the largest annual purchase on record. Emerging-economy central banks, including those in China, India and Turkey, are expanding their Gold reserves rapidly.

How does Gold move relative to other assets?

Both the US Dollar and US Treasuries are major reserve and safe-haven assets, and Gold is inversely correlated with them. A weakening Dollar generally supports Gold, allowing investors and central banks to diversify their holdings during turbulent periods. The metal also has an inverse relationship with risk assets: stock-market rallies typically weigh on Gold prices, whereas selling in riskier markets tends to support the precious metal.

Which factors influence Gold prices?

Many factors can affect Gold prices. Its safe-haven appeal means geopolitical instability or concerns over a deep recession can trigger a rapid price rise. Gold offers no yield, so lower interest rates generally support it, while higher borrowing costs usually weigh on the metal. Most price movements, however, hinge on the US Dollar (USD), since Gold is priced in dollars (XAU/USD). Dollar strength tends to restrain Gold prices, while a softer Dollar is likely to lift them.