$XAU

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Rebound buying in gold: Price attempts to hold around the $3,958 level

On the first trading day of the week, following the close of European markets, gold is attempting to hold above the $3,958 level. Reaching a high of $3,970.4 during the day, the precious metal recorded an increase of approximately 2.45% compared to Friday’s close, fluctuating within a range of $3,875 to $3,970. As shown on the 1-day chart, the price is attempting a recovery—driven by rebound buying—after a prolonged downtrend, starting from the $3,882.46 level. However, it has yet to surpass the moving averages located above $4,000 (EMA20: 4,035; EMA30: 4,078). This setup points to a consolidation zone where the market is struggling to establish a clear direction.

Geopolitical diplomacy and a dual-sided pricing dynamic

The rise in gold over the past two days has been driven by growing hopes for an agreement between the U.S. and Iran that could potentially end the conflict. While the positive trajectory of diplomatic efforts has somewhat reduced the geopolitical risk premium, the persistence of uncertainty—pending a definitive agreement—continues to provide support for gold. Markets are simultaneously pricing in the relief that a potential peace deal might bring, while the fact that regional vulnerabilities have not yet fully dissipated keeps demand for "safe-haven" assets alive. Real yields and the dollar index: A window of easing pressure

As one of the most critical macro indicators for gold pricing, the 10-year TIPS (Treasury Inflation-Protected Securities) real yield stood at 2.63% as of October 29—a gradual retreat from 2.77% on October 20 and 2.95% at the beginning of the month. During the same period, the 10-year nominal bond yield fell to 4.98% and the 2-year yield to 4.61%. Concurrently, a downward trend in the broad dollar index has helped limit the pressure on gold stemming from interest rates and the dollar. However, with real yields remaining above 2.6%, this alone does not provide a sufficient foundation for a sustained medium-term upward move.

Low VIX levels: A test for safe-haven demand

The VIX index—a gauge of overall market risk sentiment—has declined to a relatively low level of 17.2, suggesting that investors do not anticipate short-term financial stress. This supports the view that gold’s recent gains are driven more by the easing of pressure from interest rates and the dollar rather than by any new geopolitical shock. While a potential escalation, the imposition of new sanctions, or stress within the financial system could reignite demand for safe-haven assets, current data indicates that this driver has not yet come into play.

In this context, the short-term direction of gold appears to depend on whether the support level at $3,958 can be maintained and whether the resistance in the $4,000 range can be surpassed. However, rather than anchoring price movements to a single day or a specific piece of news, monitoring real yields, the dollar index, and geopolitical headlines in tandem will provide a more sound perspective during periods of volatility.

This content is for informational purposes only and does not constitute investment advice.

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