Gold defies Fed hike bets, tops $4,100 as Oil rout hits the USD

Gold prices surged over 1.50% above the $4,130 mark on Monday, despite a slight rally in US stocks following robust US job data last Friday. This surge came as the US Dollar weakened and markets became more optimistic about a potential Federal Reserve rate hike in December. US equities recovered, reflecting a risk-on sentiment, in part due to President Trump's claim that further strikes on Iran were "highly unlikely."

Consequently, the price of West Texas Intermediate (WTI) oil dropped nearly 6% to $85.00, contributing to the Greenback's decline due to its positive correlation with the currency. Reports also emerged that US-Iran nuclear talks had been revived, with a Qatar-Pakistani proposal suggesting Iran could enrich uranium to 3.67%, a move Washington reportedly agreed to.

The US Dollar Index (DXY) dropped 0.46% to 101.81, while the US 10-year Treasury yield increased by two basis points to 4.889%. Despite Gold's usual sensitivity to high interest rates, central bank purchases, particularly from the People's Bank of China, have supported the precious metal. Fed officials, such as Richmond Fed President Thomas Barkin and Chicago Fed President Austan Goolsbee, expressed varying degrees of hawkishness regarding inflation and potential rate hikes.

The US Consumer Price Index (CPI) is expected to rise from 3.7% to 3.9% year-over-year in October, with core CPI forecast to increase from 2.6% to 2.8% year-over-year. Analysts suggest that for Gold to continue its upward trend, it must break above the confluence of the 100- and 50-day Simple Moving Averages (SMAs) at $4,191 and $4,201, respectively.

Should it surpass this level, the next target is the psychological $4,300 mark. Conversely, if Gold falls below $4,100 and $4,000, the focus would shift to the November 4 daily low at $3,919 and the October 30 year-to-date low at $3,879.