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Date: 5th November 2026.

Gold Rebounds After US Midterms: Can NFP Extend the Rally?


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As the US Dollar and bond yields continue to decline, Gold finds an opportunity to rebound from its yearly lows. The US 10-year bond yield has fallen to 4.847%, the lowest level since early September. If bond yields continue to fall and inflation rises, real yields will turn negative, further supporting Gold.

Inflation is likely to continue rising slightly in the upcoming months. However, lower oil prices suggest the Federal Reserve may opt for a prolonged pause following a December rate hike. Tomorrow’s US employment data will also influence market pricing for monetary policy over the upcoming six months.

US Non-Farm Payroll & The Federal Reserve

Markets expect the Non-Farm Payrolls report to reflect a slight improvement in the US labour market from September to October. Analysts anticipate that the US economy added 65,000 jobs, while the unemployment rate held steady at 4.2%. However, weaker-than-expected data could strengthen Gold’s bullish momentum and increase the likelihood of a sustained upward trend.

Weaker US employment data could prompt the Federal Reserve to reconsider hiking interest rates in December. Economists say that weaker data would still likely see the Fed hike, but future hikes will become significantly less likely. As a result, the market will price in a maximum Federal Funds Rate of 4.00-4.25% for the foreseeable future.

If the employment data come in higher than expected, the possibility of further rate hikes could remain the same as current expectations. This is that the Federal Reserve will hike by 0.25% in December, with an additional hike in the first quarter of 2027. Based on this, the price of Gold may retrace lower before potentially falling into a price range.

Lower Oil Prices and Bond Yields

Oil prices over the past 48 hours have been falling due to the midterms. Investors believe the US midterm election results could reduce the likelihood of further military escalation against Iran.

Crude Oil prices fell to their lowest level since 1 September after declining more than 15% since the start of the week. Lower Oil prices reduce the chances of interest rate hikes and higher inflation which can support Gold.

At the same time, lower bond yields may lead to negative real bond yields, which make Gold more attractive than other safe-haven assets. So far, real bond yields have fallen, which is positive for Gold, but remain considerably high. If real bond yields remain elevated and the US Dollar Index stabilises above 100.00, Gold’s bullish momentum may be restricted.

US Midterm Elections Impact on Gold

The US midterm elections saw the Democrats win both the House and the Senate. An interesting factor is that the Democrats also won in many states that are traditionally republican. The results saw a quick change in portfolios, shifting from the US Dollar to Gold.

The reason the midterm elections are supporting Gold is threefold: the US government is likely to spend less, there may be less pressure on the Fed to hike, and there is greater political instability.

Investors anticipate that a divided government could restrict fiscal expansion and borrowing. This is something that is typical when a ruling party has no control over the Senate and House. Less spending means more pressure on inflation, consequently pressuring the US Dollar and supporting Gold.

In terms of political instability, the conflict between the White House, Senate, and House of Representatives creates a sense of instability and makes the US Dollar less attractive. However, even with the lower US Dollar Index, investors should be cautious that a price above 100.00 can still pressure Gold’s attempt to rise.

Gold (XAU/USD) - Technical Analysis

Gold rose almost 3.40% in response to the US midterms, the largest increase since August 19ths. The precious metal also added a further 2.15% during this morning’s Asian session, but has since retraced lower.


HFM - Gold 4-Hour Chart

Regardless of the retracement as we approach the European open, the price of Gold remains above the key moving averages on smaller time frames. In addition to this, Gold remains considerably higher than the Volume-Weighted Average Price. Oscillators, on the other hand, are providing a neutral indication due to the loss of short-term momentum.

If the bullish trend regains momentum, breaking above the $4,133.60, bullish signals are likely to strengthen further. Bullish signals will also find positive confirmation if the US Dollar Index also falls below 101.05 and if Silver increases above $53.060.

However, if Gold prices fall below $4,108.67, the indications are likely to weaken and provide a bearish bias. If the price continues to fall below $4,088.07, technical analysis is likely to turn fully bearish in the short term, particularly if the US Dollar Index rises above 101.25.

Key Takeaways:

* Gold rebounds as the US Dollar and Treasury yields decline, improving demand for the precious metal following its recent losses.
* US employment data could determine Gold's next move, as weaker NFP figures may reduce expectations of further Fed rate hikes.
* Lower oil prices and US midterm results support Gold, easing inflation concerns and increasing political uncertainty.
* Gold's technical outlook remains cautiously bullish.

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Please note that times displayed based on local time zone and are from time of writing this report.

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Michalis Efthymiou
HFMarkets

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