Gold price (XAU/USD) falls on Tuesday as geopolitical tensions remain high in the Middle East, with Oil prices trimming their earlier losses, boosting the US Dollar's haven appeal due to their positive correlation. At the time of writing, XAU/USD trades at $3,926, down 0.45%.
XAU/USD retreats as Oil recovers and stronger US data and high Treasury yields pressure bullion
The uncertain outcome of the US-Iran conflict is weighing on Gold, given its current negative correlation with West Texas Intermediate (WTI), the US crude benchmark. Mixed headlines revealed that Israeli intelligence shared that Iran is considering the use of chemical weapons, according to the New York Times.
Earlier, headlines reported that Washington and Tehran were close to a deal, though Iran denied those claims, according to the IRIB news agency.
Data in the US showed that job vacancies rose, according to the Job Openings and Labor Turnover Survey (JOLTS) for September. Openings rose from 7.19 million to 7.5 million, up 4.5% from the previous month. The report showed that the hire rate was 3.4%, up from 3.3%, while total separations were unchanged at 3.3%.
Other data showed that Factory Orders improved from 0.3% MoM in the prior month to 1.8% MoM in September, the US Census Bureau reported.
Given the backdrop, the Greenback recovered some ground after the US Dollar Index (DXY) hit a daily low of 101.62. The DXY, which measures the buck’s value against six peers, is nearly unchanged at 101.78.
Along with the US Dollar, bullion prices are diving amid the rise of US Treasury yields, with the 10-year T-note up 4 basis points at 4.954%.
Of note, XAU/USD remains under bearish pressure as traders increased the odds of a Federal Reserve (Fed) rate hike in December to 79% from 74% a day earlier, according to the CME's FedWatch Tool.
The World Gold Council reduced its forecast for Gold investment growth to 200 metric tons from 400, citing weaker demand for bars and coins, but raised its estimate for central bank purchases.
Commodity traders are watching the US midterm elections, with prediction sites like Polymarket indicating that Democrats could recapture the House majority, with odds near 95%. For the US Senate, the chances are near 73%, which would complete the Dems' sweep.
Aside from this, the ADP Employment Change report is eyed on Wednesday, as is the ISM Services Purchasing Managers’ Index (PMI) for October.
XAU/USD technical outlook: Gold fails to gain traction, retreats towards $3,900
After Monday’s gains, XAU/USD is retreating but has failed to register a lower low, indicating sideways action. However, momentum is edging lower into bearish territory as depicted in the Relative Strength Index (RSI). This suggests that further downside is seen in the near term.
If Gold dives below $3,900, this paves the way to challenge the October 30 year-to-date low of $3,879, followed by the April 22, 2025, daily high, turned into support at $3,500.
On the other hand, if buyers reclaim $4,000, this paves the way to challenge a crucial resistance trendline near $4,050-$4,070, ahead of $4,100.
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