Gold sellers eye reversal of November gains as $3,870 support comes into focus
- Gold retreats sharply as hotter US inflation reinforces expectations for further Fed tightening.
- Rising Treasury yields weigh on bullion, reversing much of its post-election recovery.
- Sellers eye $3,870 support, while a sustained break could bring $3,800 into focus.
Gold started November strongly, recovering from around $3,870 to $4,148—a gain of approximately $278 per ounce.
The recovery followed the Democrats’ victory in the US midterm elections. Treasury yields declined, the Dollar weakened and Gold attracted buyers.
That support has since faded as attention returned to US inflation and the Federal Reserve’s policy outlook.
Gold has fallen towards $3,938 from $4,148 in two days. Hotter-than-expected CPI, alongside Fed Governor Christopher Waller’s suggestion that a 50-basis-point December hike should be considered, strengthened expectations for further tightening.
Treasury yields rose sharply in response, with the US 10-year yield climbing from around 4.85% towards 5.00%. Higher yields increase the opportunity cost of holding non-yielding Gold, while a firmer Dollar adds further pressure.
The combination of elevated yields and expectations for further Fed tightening keeps the near-term outlook tilted towards sellers. A sustained break below $3,925 would expose the November low around $3,870. Losing that support would complete the reversal of the month’s recovery and bring $3,800 into focus.
Profit-taking on short positions could produce a rebound ahead of the weekend. However, a more durable recovery would require stronger evidence, such as easing Treasury yields, a softer Dollar or reduced expectations for Fed tightening. Until then, rebounds remain vulnerable to renewed selling.
Author
Olalekan Akinola
Independent Analyst
Olalekan Akinola is a financial-markets analyst and writer with five years of experience covering forex, commodities, and global macroeconomic developments.
