Gold Advances Toward $4,050 on US Election Dollar Slide

Key Moments

Election-Driven Dollar Weakness Lifts Gold

Gold (XAU/USD) continued to attract strong buying interest on Wednesday, extending a robust intraday ascent and printing a succession of new weekly highs. During the first half of the European session, the metal moved back toward the $4,050 mark, supported by broad-based US Dollar (USD) weakness.

US election results weighed heavily on the Greenback, pushing it to levels last seen in late September. Democratic wins in both the House and Senate increased expectations of political gridlock in Washington. The resulting uptick in political uncertainty encouraged flows into safe-haven assets and contributed to a decline in US bond yields, adding further downside pressure on the USD and bolstering demand for gold.

Fed Hike Expectations Temper Bullion Upside

Despite the favorable backdrop from currency and rates markets, gold struggled to significantly extend its intraday gains, as hawkish expectations for the US Federal Reserve (Fed) limited upside momentum. Data from the CME Group’s FedWatch Tool indicated that traders were assigning nearly an 80% probability that the Fed would raise interest rates again at its December policy meeting.

These expectations were reinforced by Tuesday’s release of the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS). The report showed that hiring remained relatively stable in September, with job openings rising to 7.523 million, up from August’s upwardly revised figure of 7.190 million. Combined with resilient economic growth and ongoing price pressures, the JOLTS data strengthened the case for an additional rate increase.

Higher rate expectations continued to constrain the non-yielding metal below the $3,970 resistance region, even as it benefited from broader market risk dynamics.

Geopolitical Premium and Oil Supply Risks

Gold also remained supported by a persistent geopolitical risk premium tied to the eight-month-old US-Iran war, despite efforts at a diplomatic resolution. Recent developments added to investor caution.

President Donald Trump told the Financial Times on Tuesday that the United States has no immediate plans to strike Iran, even after Israeli Prime Minister Benjamin Netanyahu signaled the possibility of an attack later in the week. At the same time, a senior Iranian official told Reuters that the Strait of Hormuz would reopen only if sanctions were lifted and the US naval blockade ended.

Further escalating concerns, Iran’s Islamic Revolutionary Guard Corps (IRGC) stated that four tankers were destroyed after hitting mines south of the Strait of Hormuz. These events intensified fears about oil supply disruptions and heightened inflation risks arising from volatile energy prices, thereby reinforcing expectations for further Fed policy tightening.

Data Calendar: ADP, ISM Services and NFP in Focus

Market participants turned their attention to Wednesday’s US economic schedule, which includes the ADP private-sector employment report and the ISM Services PMI. These releases have the potential to influence short-term moves in both the USD and gold.

However, the main macro focus remained on Friday’s closely watched US Nonfarm Payrolls (NFP) report. The labor market data are expected to play a key role in shaping USD demand and clarifying the near-term direction of XAU/USD.

Given the overall fundamental setting – combining political uncertainty, geopolitical tensions, and firm Fed tightening expectations – many traders may prefer to wait for evidence of sustained follow-through buying before concluding that gold has definitively formed a bottom. The metal has been attempting to recover from the lowest level since September 2025, which was reached last Friday, but confirmation of a durable trend reversal is still pending.

Technical Picture: Resistance Levels Cluster Above Current Prices

On the 4-hour chart, XAU/USD continues to trade with a bearish bias, holding below the 100-period Simple Moving Average (SMA) and under all key Fibonacci retracement levels of the decline from the mid-October highs. The 23.6% retracement at $3,947 is acting as the first significant resistance level, followed by the $3,970 zone.

The Relative Strength Index (RSI) stands at 48.94, close to neutral territory, while the Moving Average Convergence Divergence (MACD) indicator remains in positive territory at 6.65. This combination suggests some stabilization in momentum, though not yet enough to decisively overturn the broader downside structure.

A sustained break above $3,970 would open the way toward the 38.2% Fibonacci retracement at $3,995, ahead of the 50.0% retracement at $4,033. Beyond that, the 100-period SMA at $4,057, followed by the 61.8% and 78.6% retracements at $4,072 and $4,127 respectively, come into view before the cycle high near $4,197.

On the downside, primary structural support is identified around the Fibonacci anchor at $3,869, where buyers may attempt to reinforce a floor if selling pressure resumes.

XAU/USD – Key Technical Levels

ADP Employment Change: Definition and Trading Impact

The ADP Employment Change is a monthly indicator that tracks shifts in private-sector employment in the United States, compiled by Automatic Data Processing Inc., the country’s largest payroll processor. It measures the variation in the number of privately employed individuals.

An increase in this indicator is generally associated with stronger consumer spending and is considered supportive of economic growth. As a result, higher readings are typically interpreted as positive for the US Dollar, while weaker readings are often viewed as negative.