FxStreet reports — Early Tuesday Asian trading saw spot gold rebound to around $3,950, as declining international oil prices eased inflationary pressures and supported gold’s recovery. Efforts to mediate the U.S.-Iran conflict continue but have yet to yield substantive breakthroughs; market expectations for a Fed rate hike in December have been lowered to approximately 73%. The U.S. midterm elections have emerged as a key short-term variable, while central bank gold purchases continue to provide fundamental support for gold prices.
Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, noted that weakening oil prices have somewhat alleviated market inflation concerns; however, markets still price in a possibility of a Fed rate hike in December, though the probability has slightly declined over the past few trading days. The upcoming U.S. midterm elections could shift market narratives back toward inflation and fiscal deficit issues, providing short-term support for safe-haven assets like gold. CME tool data shows that the market currently prices a 73% probability of a Fed rate hike in December, down from approximately 80% a week ago—this marginal cooling in rate hike expectations has created conditions for a gold price rebound.
HSBC analysts note that a relatively stable U.S. dollar helps mitigate downward pressure on gold prices, as gold benefits from multiple supports including central bank diversification-driven buying, geopolitical uncertainty, and fiscal instability; however, institutions also caution that oil prices will continue to experience sharp, volatile swings in response to geopolitical developments, with energy sector uncertainty persistently spilling over. In emerging markets, some African economies benefit from bullish sentiment toward precious metals, yet ongoing geopolitical uncertainty continues to weigh on regional performance; Asian emerging markets demonstrate resilience through their role in the global AI supply chain, but institutions are becoming more cautious in selecting related assets. At the sector level, certain sectors are trading at market lows, while large corporations show strong cash flows and dividends, providing fundamental support; however, regional conflicts are likely to persist through year-end, with infrastructure damage hindering rapid economic recovery, causing geopolitical risks to compound atop fundamental factors. Trade concerns are not the primary driver at present—interest rate expectations and geopolitical events dominate short-term gold volatility.
On the daily chart, the overall bearish pressure on spot gold has not been reversed, with price trading below both the 20-period Bollinger Band midpoint and the 100-day moving average, remaining constrained by the overhead moving averages and oscillating near recent lows. The 14-period RSI reading stands at 36.88, having just exited the oversold zone—downward momentum has weakened but not fully exhausted. Until price reclaiming the overhead moving averages, further downside remains possible. Initial resistance lies at the Bollinger Band midpoint at 4090, with the 100-day MA at 4210 and the upper Bollinger Band at 4255 forming a strong supply zone; should the rebound continue, these levels will face significant selling pressure. The nearest support is the lower Bollinger Band at 3920; if this level is convincingly broken, gold could open up fresh downside potential. If price holds above 3920, gold will remain confined within a bearish consolidation range under the moving average resistance. On the 4-hour chart, a short-term recovery rebound has emerged from the lows, with price gently testing higher levels—but it remains below key moving averages. Indicators have recovered from oversold territory but have not yet entered overbought territory; the rebound is largely technical in nature. Only a sustained close above 4090 resistance would improve the short-term weak structure; conversely, if the rebound falters and price reverses lower, it will retest the key support at 3920.
Editor’s Summary
Gold is currently in a phase of bullish-bearish contention, with falling oil prices easing inflation expectations and slightly reducing the probability of a December Fed rate hike, combined with potential safe-haven demand from the midterm elections, collectively driving a rebound from lower levels; however, medium-term prices remain under pressure from the 100-day moving average, and the overarching bearish sentiment has not fundamentally changed. The long-term fundamental support from central bank gold purchases remains intact, but near-term price movements are heavily dependent on the outcome of the U.S. midterm elections, Fed policy expectations, and developments in the Middle East. Short-term risks center on a renewed strengthening of the dollar and a resurgence in加息 expectations, which could push gold below key support levels; potential opportunities lie in escalating geopolitical tensions or a deterioration in U.S. fiscal or inflation narratives, triggering safe-haven buying in gold. Avoid blindly assuming a reversal—wait for clear breakout signals above key resistance or below key support, and prioritize managing the risk of significant asset price volatility around the timing of the midterm elections.