Gold slips as oil volatility and US-Iran tensions weigh on market
Gold fell to around $3,933 on Tuesday, pressured by fluctuating oil prices and expectations of further US rate hikes amid Middle-East uncertainty and upcoming US employment data.
Gold (XAU/USD) slipped to about $3,933 on Tuesday, down 0.31% for the day but staying above its intraday low of $3,895. The metal’s decline followed a brief rebound after unconfirmed reports that Washington and Tehran had made concessions on Iran’s nuclear programme and frozen assets, while oil prices later rose again.
Oil prices have been volatile after a Wall Street Journal report of a US strike on Iran’s Qeshm Island, and the link between oil and interest-rate expectations continues to influence gold. Higher energy costs add inflationary pressure, prompting the Federal Reserve to keep rates elevated. The Fed raised rates by 25 basis points in September and paused in October, leaving a 75% probability of another hike in December, according to the CME FedWatch Tool.
A stronger US dollar, supported by robust labour data – JOLTS job openings rose to 7.523 million in September, above forecasts – also weighed on gold. The dollar index was near 101.93.
Commerzbank analyst Norman Liebke noted that the outcome of the US midterm elections could affect the dollar’s direction. > "A scenario in which the Republicans lose their majorities in both chambers could see the dollar come under greater pressure, as the Trump administration would have less political backing overall." He added that any escalation of conflict with Iran could lift energy prices and risk aversion, potentially benefiting the dollar as a safe-haven asset.
Technical indicators suggest a bearish bias. The daily chart shows gold trading below its 21-day, 100-day and 200-day simple moving averages. The Relative Strength Index sits at 34, just above oversold levels, and the MACD remains below zero. Immediate resistance is near $3,950-$4,000, while support lies around $3,870, the low recorded on the previous Friday.