By Linh Tran, Market Analyst at XS.com
In the early sessions of November, gold prices continued to hover around the US$3,980–4,000/oz range, reflecting the tug-of-war between a strong U.S. dollar and renewed safe-haven demand. After a prolonged rally, the U.S. Dollar Index (DXY) approached the 100 level — its highest since early August — before retreating slightly to around 99.6. This movement suggests that the foreign exchange market is pausing after a period of dollar strength, although the fundamental pressure on gold has yet to ease.
The core factor remains the “higher-for-longer” monetary stance maintained by the Federal Reserve. Following its late-October meeting, the Fed cut interest rates by 25 basis points, bringing the target range down to 3.75%–4.00%, but Chair Jerome Powell emphasized that this was not the start of an aggressive easing cycle. His comments reinforced expectations that interest rates will stay elevated for an extended period, keeping the 10-year U.S. Treasury yield steady around 4.1%. In this environment, the opportunity cost of holding gold continues to rise.
At present, the USD is showing mild weakness as the DXY reacts to the 100 threshold, providing a temporary advantage for gold. However, to establish a more sustained upward trend, gold would need stronger support from safe-haven flows, which have become increasingly sensitive to recent geopolitical developments.
According to Axios (Nov 5), Russian President Vladimir Putin has instructed the defense ministry to prepare plans for a potential resumption of nuclear testing, following U.S. President Donald Trump’s statement expressing his intention to end Washington’s decades-long moratorium on nuclear tests. Although Russian officials indicated that Moscow would only act if the U.S. conducts a test first, the remarks have sparked caution across commodity and bond markets.
While this risk is not yet severe enough to trigger panic, it is significant enough to sustain safe-haven demand for gold. In the near term, gold may therefore receive modest support as investors hedge against geopolitical uncertainties — particularly with Middle East tensions unresolved and U.S.–China trade relations still clouded by uncertainty.
From a macroeconomic perspective, U.S. data continue to portray an economy that is slowing but resilient. The October ISM Manufacturing PMI registered 48.7, down slightly from 49.1 in September, indicating that the manufacturing sector remains in contraction but has not deteriorated sharply. The labor market also remains firm, with the unemployment rate around 4.3%, reinforcing the view that the Fed has no immediate need for aggressive rate cuts. This means that the prolonged high-rate environment remains the main headwind for gold.
Overall, in the coming sessions, with the USD cooling slightly, yields remaining elevated, and geopolitical risks persisting, gold is likely to experience a mild recovery. However, in the medium term, pressure from the dollar and monetary policy is expected to continue capping the upside. That said, the renewed U.S.–Russia nuclear tensions could help gold maintain its support zone and lay the groundwork for a stronger rebound once the Fed signals a more dovish shift in the months ahead.