The dollar index eased from its highs to 101.3 during Wednesday's Asian session, easing some of the pressure that had been weighing on gold.
US Treasury yields edged lower in tandem, marginally reducing the holding-cost burden on non-yielding gold, while spot gold swung repeatedly around 3950 in what was largely a base-building consolidation.
Market attention remains fixed on the US midterm election results for clues on the future path of fiscal and debt policy, with the outcome set to directly influence dollar volatility.
Where the market stands
Market opinion holds that if Democrats win both chambers of Congress, pushing policy through becomes harder, which could weigh on the dollar and benefit gold; a divided-government scenario, by contrast, would ease fiscal constraints and make the dollar more resilient.
The latest World Gold Council data show global central banks bought a net 321 tonnes of gold in the third quarter, the fastest pace of purchases since late 2024, with physical buying providing support at the bottom; the Council, however, cut its full-year forecast for the increase in gold investment demand, reflecting weak willingness among speculative funds to participate.
According to Commerzbank, gold's earlier one-day drop of 3.7% and a monthly decline of nearly 7% in October largely priced in expectations of a December Federal Reserve rate hike, but after the Fed held rates steady last week, long-end yields have already retreated, suggesting this decline was an overshoot and that the medium- to long-term bullish logic has not disappeared.
Current market tensions
The current dollar weakness offers support, but market pricing for a rate hike has not fully faded and bullish funds remain heavily on the sidelines, leaving gold without sustained rebound momentum and instead grinding out a bottom within a range.
On the daily chart, gold is in a base-building structure, trading below the 100-day moving average and the Bollinger middle band, with the medium-term trend still leaning weak, though downside momentum has clearly faded.
The RSI sits near 36, close to oversold territory, and with selling pressure released, low-level buying strength is gradually emerging, underscoring the base-building character.
The first resistance above is the Bollinger middle band at 4080, with strong resistance at the 100-day moving average of 4205; the core support below is the Bollinger lower band at 3900, a key line of defense for this base-building effort 鈥?holding 3900 keeps the range-grinding pattern intact, while a decisive break below would mean the base-building has failed and bears would regain the upper hand.
Short-term technical picture
On the 4-hour timeframe, candles are converging and moving averages are entwined, with the trading range narrowing and bulls and bears becoming more balanced 鈥?a typical bottoming consolidation pattern.
Short-term volatility elasticity has declined, and the lift from a weaker dollar has only driven a modest repair, making a direct break above resistance difficult.
Near-term resistance is 3970 and near-term support is 3900; until the range is broken, the base-building view holds, and confirmation of the bottom's validity requires a fundamental signal.
Summary
With the dollar retreating, near-term bearish constraints have eased somewhat, and combined with continued central bank buying, gold has entered a base-building phase 鈥?but that base is not yet complete and a reversal cannot be confirmed in advance.
The market's core conflict now is the offsetting pull between the drag from rate-hike expectations and election-driven dollar uncertainty on one side, and the support from the earlier oversell and central bank physical buying on the other.
In the near term, treat this as a range play, watch the strength of the bottom around the 3900 support, and focus upward on whether the 4080 resistance can be held; before a clear breakout, avoid excessive aggressiveness and keep a close watch on the US midterm elections, Treasury yields and the dollar's next moves, while guarding against rapid breakdowns driven by headlines.
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