Solid Gold Berjangka - Global gold prices received a boost during Asian trading on Wednesday (November 4) as the US dollar weakened against the backdrop of unfolding results from the US midterm elections. XAU/USD is currently trading around US$3,951 per troy ounce, with a decline in US government bond yields providing further support for the precious metal.
Early election results have heightened market focus on a potential shift in control within the US Congress. Market participants anticipate that a change in the composition of the House of Representatives and the Senate could increase the risk of political gridlock in Washington, limiting the government's capacity to pursue its fiscal and spending agenda—a dynamic that has weighed on both the dollar and Treasury yields.
Nevertheless, the upside for gold remains constrained by expectations that the Federal Reserve will maintain a hawkish policy stance. The market currently assigns an 80% probability to another interest rate hike by the Fed in December, following JOLTS data which showed US job openings rising to 7.523 million in September, up from 7.190 million in August.
This data reinforces the view that the US labor market remains relatively resilient, complementing robust economic growth and persistent inflationary pressures. These conditions support the outlook for further tightening by the Fed and have kept gold’s movement capped near the US$3,970 per troy ounce resistance level.
On the geopolitical front, the risk of a US-Iran conflict continues to bolster demand for safe-haven assets. President Donald Trump stated that Washington has no immediate plans to attack Iran; however, tensions remain elevated after Tehran linked the reopening of the Strait of Hormuz to the lifting of sanctions and the end of the US naval blockade. The risk of disruptions to energy supplies remains a concern, as such an event could further intensify inflationary pressures.
Investors are now looking ahead to the ADP Employment and ISM Services PMI data, due Wednesday, before shifting their focus to the Nonfarm Payrolls report on Friday. Strong labor market data could revive expectations for interest rate hikes and put pressure on gold, while weaker data might provide room for XAU/USD to break through the US$3,970 level and strengthen its short-term recovery. (srh)