Gold climbs to near $3,950 as traders prepare for US midterm election

• A 1.75% daily gain takes Gold towards $3,950 in early Asian trading on Tuesday.
• Talks aimed at ending the war remain under way, Iran says, following a session without a breakthrough.
• Gold could draw support from safe-haven demand amid uncertainty over the US midterm elections.

Lower oil prices have eased inflation concerns, helping Gold (XAU/USD) recover to around $3,950 in Tuesday’s early Asian trading. Attention among traders will turn to the US midterm elections later this week.

Several days of talks involving Iranian officials and Qatari mediators produced revised proposals without a significant breakthrough, according to Reuters. Against that backdrop, Tehran said on Monday that US-Iran discussions aimed at ending their eight-month conflict remained under way.

The proposal Iran put forward in September to end the war remains central to the talks, according to Iran’s Foreign Ministry spokesperson Esmaeil Baghaei. He nevertheless confirmed comments attributed to Foreign Minister Abbas Araqchi on Saturday indicating that the proposal could be shortened.

Peter Grant, vice president and senior metals strategist at Zaner Metals, said: “Weaker oil prices have provided some relief … in terms of reducing inflation concerns. But the market is still expecting a December rate hike from the Fed, although those odds have lessened a little bit over the last couple of trading sessions,”

Inflation and deficit concerns could return to the centre of the broader market narrative following Tuesday’s US midterm elections, potentially lending near-term support to safe-haven assets such as Gold. Opinion polls favour a Democratic victory in the House, although control of the Senate remains less certain.

According to the CME FedWatch Tool, the probability of a US interest rate rise in December implied by market pricing has fallen to nearly 73%, compared with 80% a week earlier.

Gold finds support while oil and regional risks weigh on markets

In HSBC’s assessment, “a stable US Dollar should help temper risks to gold,” with the metal described as one that “remains well supported by diversification flows from central bank purchases, as well as geopolitical and fiscal uncertainty.” Energy, by contrast, remains a source of uncertainty: the bank cautions that “we expect oil prices to remain volatile as they respond to changes in the news flow,”

Turning to equities, HSBC observes that “South Africa benefits from a bullish outlook for gold, but geopolitical uncertainty remains a drag on the region,” and that “elevated oil prices remain headwinds for the region.” Despite the structural advantages of EM Asia, the bank has adopted a more selective approach, saying the region “is resilient given its strategic role in the global AI supply chain, but we have become more selective,”

HSBC’s sector assessment points to supportive fundamentals, noting that “the sector is benefitting from multiple positive trends that are lifting demand and prices,” and that “valuations are the lowest among all sectors, with many large companies reporting strong cash flows and relatively high dividends.” Geopolitical risks nevertheless remain a significant consideration. The bank warns that “regional conflicts are likely to continue for the rest of the year, with damaged infrastructure delaying a swift return to normality,”

Technical Analysis: Gold remains under bearish pressure below the 100-day SMA

Trading below both the 20-period Bollinger Bands simple moving average (SMA) and the 100-day SMA, XAU/USD retains a clearly bearish bias on the daily chart. These averages suggest that upside remains constrained as the price consolidates close to recent lows. At 36.88, the Relative Strength Index (14) is still just above oversold territory, signalling weak downside momentum rather than complete exhaustion. Further declines therefore remain possible unless the price recovers above these overhead averages.

The Bollinger midline around $4,090 provides the first upside resistance. Beyond it, the 100-day SMA at $4,210 and the upper Bollinger band near $4,255 mark a broader supply zone if a recovery gathers momentum. Immediate support lies at the lower Bollinger band of $3,920. A clear break below that level would open the way to fresh lows; if it holds, XAU/USD would remain within a bearish range below the cluster of moving-average resistance.

(The technical analysis of this story was written with the help of an AI tool. Know more.)