Gold holds near $3,900 as dollar slides and Fed hike odds stay high
Gold prices stayed just below $3,900 on Monday, supported by a weaker dollar and mixed geopolitical cues, while market participants price a strong chance of another Federal Reserve rate increase in December.
Gold (XAU/USD) remained just under the $3,900 level during the first half of Monday’s European session, as the U.S. dollar fell to a one-week low. The dip in the dollar was linked to optimism about a possible diplomatic breakthrough to end the conflict involving the United States and Iran, which reduced demand for traditional safe-haven assets. A sharp decline in oil prices also eased inflation concerns and pushed U.S. bond yields lower, further supporting the metal.
Despite the softer dollar, bets that the Federal Reserve will raise rates again remain high. The CME Group’s FedWatch Tool shows a roughly 75% probability of a December rate hike, keeping the non-yielding gold near its October 2025 low.
Iranian negotiators met with Qatari mediators for a third consecutive day, discussing a plan to reopen the Strait of Hormuz if the United States meets certain conditions. President Donald Trump said negotiations with Iran were progressing well and that Iran wanted a deal, but he did not rule out additional military action after the November 3 midterm elections. Iran’s Supreme Leader, Mojtaba Khamenei, instructed top military commanders to prepare for renewed confrontation with the United States and Israel.
Technical analysis shows gold trading below the 100-period exponential moving average on the 4-hour chart, with the MACD in negative territory. The Relative Strength Index is in oversold territory, suggesting limited short-term downside potential. Traders may look to the $3,870 region as a near-term support level, while a move above $4,068.55 could relieve the current bearish bias.
Upcoming U.S. data, including the ISM Manufacturing PMI, ISM Services PMI and the Nonfarm Payrolls report, are expected to influence market direction later in the week.