Spot gold rebounded on Monday as a drop in crude oil eased pressure on the Federal Reserve outlook. The metal still sits below $4,000, and the market prices a December rate hike at 70% to 81% odds. Friday's jobs report is the next test.
Spot gold traded at $3,945.70 an ounce in early U.S. trading on Monday, November 2, up 1.80% from Friday's close of $3,877.80. Oil drove the move, not safe-haven demand. WTI dropped 6.28% to $97.58 a barrel before the U.S. open as Iran signaled it could reopen the Strait of Hormuz within two days.
Cheaper oil lowers the inflation outlook, which lowers the odds of a Fed rate hike in December. That in turn cuts the opportunity cost of holding a metal that pays no yield.
Friday's selloff hit gold despite falling yields
Gold fell 3.6% on Friday, October 30, and touched $3,869.80, its lowest price since October 2025. The Nasdaq Composite had its worst session since June on the same day, falling 2.86% to 25,437.00.
The analysis attributes the link to forced selling. When leveraged equity portfolios take losses, brokers issue margin calls, and investors sell whatever they can sell fastest. Gold is the most liquid non-equity asset in a typical portfolio, so it went first, despite falling Treasury yields.
The Fed leans toward a hike
The Fed held its benchmark rate at 3.75% to 4.00% on October 28 in a 10-2 vote, with both dissenters favoring an immediate hike. Data on October 29 then showed third-quarter growth of 3.4% and PCE inflation at 3.6%. Futures markets priced a December hike as the leading outcome.
Meanwhile, the 2-year Treasury yield rose 2 basis points to 4.598% on Monday, a sign the market is not yet convinced the hike is off the table.
Jobs report and Iran talks set the next move
The October jobs report arrives at 8:30 a.m. ET on November 6, with consensus at 65,000 new jobs. A soft print would cut December hike odds sharply and give gold a path above $4,000, according to the analysis. A strong print above 120,000 would send gold back toward Friday's low.
Iran's offer carries its own risk. Tehran wants the U.S. to lift the naval blockade of Iranian ports and ease sanctions on oil exports, and Iran's foreign minister said Sunday the talks had not produced an agreement.
The $4,000 level sits 1.4% above Monday's price, with resistance at $4,035 to $4,085.
Source: Investing.com
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