On Monday, November 3, gold prices staged a strong rebound of nearly 2% from the one-year low touched in the prior session, with spot gold closing at $3,946.47 per ounce after hitting an intraday high of $3,970. Before that, gold had tumbled 3.6% last Friday to mark its lowest level since October 2025, making this rebound a closely watched event for the market.
On the surface it looks like a purely technical correction, but behind the move lies a confluence of factors: a sharp drop in oil prices, a weaker dollar, a slight adjustment in Federal Reserve rate hike expectations, and the approach of the U.S. midterm elections. Gold now sits at the center of a tug-of-war among multiple macro forces.
This rebound was driven by a convergence of bullish conditions: crude oil fell sharply, easing market inflation concerns; the dollar weakened, lowering the holding cost of dollar-denominated gold; marginal relief in Fed rate hike expectations further reduced pressure on bullion; and deeply oversold conditions after the prior steep decline sparked a technical recovery.
That said, this does not mean gold has reversed its weak trend. Markets still price a 75% probability of a Fed rate hike in December, while the resilience of U.S. manufacturing and persistently elevated input prices will continue to cap upside room for gold.
The key focus ahead centers on the outcome of the U.S. midterm elections, alongside a dense slate of economic data and policy signals this week, which will determine gold's next direction. If the election results produce a fiscal policy deadlock and raise geopolitical uncertainty, gold's safe-haven appeal could regain momentum; if the elections conclude smoothly while economic data stays strong, bullion may come under pressure again. The current market combines a short-term rebound with medium- to long-term uncertainty, so investors should stay cautious, keep a close eye on election results and policy signals, and identify opportunities amid the volatility.
Yesterday's positive close and rebound followed fairly straightforward logic: international oil prices plunged, easing the energy variable that had previously fueled inflation expectations, while the dollar index flattened, giving gold's short-term pressure some relief. In addition, after last week's steep selloff, the market needed a repair, so this rebound was within expectations. The early-session plan was clear: the $3,950 level was an ideal shorting spot, with a break above it warranting a wait-and-see stance; we set up a short-term long near $3,940, and prices reached a high of $3,970, allowing the day's positioning to be realized smoothly.
Today's market focus is on the bounce, though the daily chart shows only a single bullish candle, so the final direction still needs confirmation from today's close. After rebounding from lows, gold reclaimed the $3,900 level, hit resistance near $3,970 during U.S. trading, then pulled back and closed firmly above $3,946. The $3,900 level has shifted from prior resistance to short-term support, but selling pressure above the $3,970 area has not been fully digested. This rebound is defined as a repair within a downtrend, not a trend reversal.
Three major drivers behind this rebound: U.S. Treasury yields and the dollar pulled back in the short term, lowering gold's opportunity cost; the oil price slump weakened market tightening expectations; and after the prior rapid decline, short covering and oversold buying flowed in together. However, longer-term moving averages remain in a bearish alignment, and until the daily chart reclaims the $4,000 mark, bulls will struggle to take control of the market.
Combined with a cluster of heavyweight data this week — the U.S. midterm elections, ISM manufacturing PMI, and Friday's nonfarm payrolls — funds are more inclined to try shorts at highs and cover longs at lows before the data window, making a one-sided rally unlikely. Only by understanding the underlying logic behind price moves can one better follow the rhythm of positioning.
On trading strategy, Wen Chengkai recommends favoring short positions on rallies, with a final downside target of $3,500. Today's main trading theme is shorting into rebounds. Watch resistance in the $3,970–$4,000 zone, and support in the $3,900–$3,870 zone.
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