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Published: 2 November 2026,05:31
Daily Market Analysis New
*Markets priced approximately a 75% probability of a December rate hike following the Fed’s decision to maintain interest rates unchanged in October.
*The Dollar Index remained relatively stable as political uncertainty ahead of the November 3 midterm elections limited buying interest.
*Investors await the US midterm elections and further Federal Reserve commentary for clearer market direction.
Gold prices extended their decline below the crucial psychological $4,000 level as stronger-than-expected U.S. economic data and elevated crude oil prices reinforced concerns over persistent inflation. The recent resilience of the American economy has strengthened expectations that the Federal Reserve may need to maintain restrictive monetary policy for longer. Following October’s decision to leave interest rates unchanged, markets priced approximately a 75% probability of another rate hike in December, increasing pressure on non-yielding bullion.
Meanwhile, rising crude oil prices have added to inflationary concerns, potentially encouraging the Federal Reserve to maintain a hawkish policy stance. The prospect of higher interest rates and elevated Treasury yields has reduced the relative attractiveness of gold, particularly as investors reassess the opportunity cost of holding non-yielding assets.
Furthermore, the recent selloff across global equity and European sovereign bond markets has intensified financial market volatility. Rising bond yields and heightened liquidity requirements may have encouraged some investors to reduce their gold exposure to meet margin requirements or rebalance portfolios. These developments have added to selling pressure despite persistent geopolitical uncertainty, traditionally a supportive factor for safe-haven assets.
On the other hand, the U.S. Dollar Index remained relatively stable as investors adopted a cautious approach ahead of the November 3 midterm elections. Market participants are assessing the possibility of a divided Congress, which could create legislative gridlock and uncertainty surrounding future fiscal policies. These concerns have limited dollar buying interest despite stronger-than-expected U.S. economic performance.
Nevertheless, the dollar continues to receive underlying support from persistent inflation and expectations of further Federal Reserve tightening. Recent economic data highlighted resilient growth and sustained price pressures, reinforcing the possibility of another interest rate increase in December. As a result, the Dollar Index has remained in consolidation as investors weigh supportive monetary policy expectations against political uncertainty.
Looking ahead, the U.S. midterm elections and Federal Reserve policy expectations will remain crucial catalysts for both gold and the dollar. Stronger expectations of additional monetary tightening and rising Treasury yields could extend gold’s bearish momentum, while softer inflation expectations and a less hawkish Fed outlook may support a recovery. Meanwhile, the dollar could experience increased volatility as investors assess the election results and their potential implications for future U.S. fiscal and monetary policies.
Technical Analysis
XAUUSD, H4:
Gold prices are trading lower, currently testing the 3,975.00 support level, which acts as a key near-term downside pivot.
Momentum indicators remain bearish, with the MACD showing diminishing bullish momentum, while the RSI at 33 stays below the midline and approaches oversold territory. This suggests that selling pressure may persist, although the risk of a short-term technical rebound is also increasing.
Market attention remains focused on a potential breakdown below 3,975.00. A confirmed break could extend losses toward the next support level at 3,865.00, reinforcing the bearish short-term structure.
However, if bearish momentum begins to fade, gold may stage a technical rebound and retest the 4,080.00 resistance level, followed by 4,195.00 if recovery momentum strengthens.
Resistance Levels: 4080.00, 4195.00
Support Levels: 3975.00, 3865.00
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