Gold prices came under renewed pressure during the European trading session on Tuesday (November 3, 2026), trending downward toward the US$3,907 per troy ounce level. This weakness highlights the fragility of the precious metal’s recovery momentum, following a gain of more than 2% in the previous session. Selling pressure has returned, driven by growing concerns regarding the outlook for U.S. interest rates, while investors remain cautious ahead of the U.S. midterm elections.
Downward pressure on gold intensified following reports of a U.S. strike on Iran’s Qeshm Island, which triggered a rebound in global oil prices. This development has fueled fears that inflation could remain elevated due to rising energy costs. Such a scenario reinforces expectations that the Federal Reserve (the Fed) may maintain a tight monetary policy—or potentially even raise interest rates further. The prospect of higher interest rates acts as a headwind for gold, as it enhances the appeal of yield-bearing assets compared to non-yielding precious metals.
On the economic front, the U.S. ISM Manufacturing PMI rose to 55.5 in October—surpassing the forecast of 54.5—further suggesting that U.S. economic activity remains quite resilient. This provides the Fed with the flexibility to prioritize inflation control without the immediate need to loosen monetary policy. Meanwhile, market participants are also awaiting the JOLTS Job Openings data, which may offer further insight into the strength of the U.S. labor market.
In the short term, gold is expected to remain sensitive to shifts in interest rate expectations, U.S. Treasury yields, and geopolitical developments in the Middle East. The outcome of the U.S. midterm elections could also drive increased volatility, as it may influence the direction of fiscal policy under the Donald Trump administration. Should expectations for high interest rates persist and the U.S. dollar gain strength, gold risks extending its decline. However, rising political and geopolitical uncertainty could still create an opportunity for a recovery in demand for safe-haven assets.
Impact on the US Dollar (USD)
The US Dollar has the potential to strengthen fundamentally, especially if the market increasingly anticipates that the Federal Reserve will maintain high interest rates due to inflationary pressures.
- Inflation driven by rising oil prices: This could reinforce expectations of high interest rates and support the dollar.
- Solid US economic data: This has the potential to sustain the dollar's appeal by driving up bond yields.
- US midterm elections: These could trigger volatility in the dollar, depending on the election results and investor response.
Conclusion: The pressure on gold—moving toward US$3,907—indicates that interest rate sentiment remains the primary obstacle to a recovery. As long as expectations for Federal Reserve policy remain hawkish, the dollar is likely to find support, while gold faces the risk of continued downward pressure. (CP)