Gold prices remained volatile during Monday’s trading session as the US presidential election looms, creating uncertainty regarding the potential winner of the White House. The XAU/USD pair traded around $2,736, showing little change as traders await key developments this week, including the US Federal Reserve’s (Fed) anticipated interest rate decision during its meeting on November 6-7.
Yields on the US 10-year benchmark note decreased by eight basis points, sitting at 4.30% after reaching a peak of 4.388% last week. This decline contributed to the US Dollar Index (DXY) dropping over 0.40%, down to 103.90, reflecting a generally softer dollar environment.
Election Uncertainty and Economic Data
Wall Street’s attention is firmly fixed on the election outcome, with opinion polls indicating a near tie between Democratic candidate Kamala Harris and Republican Donald Trump. Concerns persist about a potential election crisis similar to the aftermath of Trump’s 2020 defeat, amplifying market anxieties.
By Thursday, analysts expect the Federal Reserve to lower borrowing costs by 25 basis points, bringing the target range to 4.50%-4.75%. Recent US economic data has suggested resilience in the job market, reducing fears of an impending recession.
According to TD Securities analysts, a Trump victory could boost gold prices, as market participants might grow more concerned about inflation, particularly given Trump’s inclination towards tariffs. Gold is traditionally viewed as a safe-haven asset during periods of economic and political uncertainty.
Gold’s Performance and Technical Outlook
Gold has experienced a remarkable rally of over 30% in 2024, reaching all-time highs of $2,790. Currently, the market appears to be consolidating, with XAU/USD fluctuating between $2,730 and $2,748 throughout the day, lacking a strong catalyst to break out of this range.
The bullish momentum is indicated by the Relative Strength Index (RSI), which remains in positive territory, although it has recently dipped slightly, suggesting a potential pause in buying activity.
For gold prices to maintain a bullish trajectory, reclaiming the psychological $2,750 level is crucial. A break above this level would pave the way towards the record high of $2,790. Conversely, if XAU/USD closes below $2,750, it could signal further weakness, with initial support found at the October 23 low of $2,708. If that level is breached, subsequent support could be at $2,700, followed by the September 26 swing high at $2,685 and the 50-day Simple Moving Average (SMA) at $2,628.
Key Takeaways
Current Price: XAU/USD around $2,736.
Market Drivers: US presidential election uncertainty and the upcoming Fed meeting.
Technical Levels: Resistance at $2,750; support at $2,708 and below.
Outlook: A bullish continuation requires a reclaiming of $2,750; otherwise, further downside may ensue.
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