Gold Prices Surge to $2,665; Fed Rate Cut Nears and Geopolitical Tensions Rise

Key Insights:

• Gold prices rose to $2,667 as U.S. Treasury yields declined, boosting demand for safe-haven assets ahead of anticipated Fed rate cuts.

• Geopolitical tensions, particularly in the Middle East, and uncertainty surrounding the U.S. elections are adding support to gold’s upward momentum.

• Technical analysis shows immediate resistance at $2,672, with potential upside toward $2,685 and $2,698, while strong support lies at $2,646.

The opportunity is evident:
Central banks are ramping up #gold purchases, geopolitical tensions are high, and the Fed's rate cuts are weakening the dollar – all supporting gold's strength.

Are you maximizing this momentum?

— Waraba Gold (@WarabaGold) October 15, 2024

ANZ commodity strategist Soni Kumari noted that U.S. monetary policy easing remains a crucial driver for gold prices.

“The game changer in gold prices is the U.S. monetary policy easing as it sets the stage for investment demand,” she stated.

Kumari also pointed out that uncertainty surrounding the upcoming U.S. elections and geopolitical tensions, particularly in the Middle East, are likely to provide further support for gold prices moving forward.

Fed Rate Cut and Economic Data Support Gold’s Rise

Investors are eagerly awaiting key U.S. economic data, including retail sales, industrial production, and weekly jobless claims, all set to be released on Thursday.

These data points will offer fresh insights into the Federal Reserve’s monetary easing cycle, with traders already pricing in a 97.2% chance of a 25 basis-point rate cut in November.

Additionally, comments from Federal Reserve officials continue to shape market expectations. San Francisco Federal Reserve Bank President Mary Daly indicated that the central bank remains on track for more interest rate cuts this year, provided economic data meets expectations.

Meanwhile, Atlanta Fed President Raphael Bostic mentioned that he expects just one more 25-basis point reduction this year, as reflected in his recent projections.

Geopolitical Tensions Further Strengthen Gold’s Appeal

In the international arena, Israeli Prime Minister Benjamin Netanyahu reaffirmed to French President Emmanuel Macron that he would not agree to a ceasefire deal that allows Hezbollah to rearm.

This ongoing geopolitical tension has added an additional layer of uncertainty, further driving investment demand for safe-haven assets like gold.

Gold stays pressured on Oct 15, 2024, as Fed rate cut bets and USD strength drive prices down. XAU/USD near $2,655. Geopolitical risks may limit deeper losses. pic.twitter.com/hXhRFsL9Jg

— Russell Calkins (@RUSSELLCALKINS) October 15, 2024

At the London Bullion Market Association’s annual gathering, delegates forecasted a strong outlook for precious metals, predicting that gold prices could rise to $2,941 per ounce over the next 12 months.

Additionally, silver is expected to surge, with projections of reaching $45 per ounce.

Gold’s Technical Outlook: Key Levels to Watch

Gold is currently trading at $2,667, showing a slight upward momentum as it approaches key resistance levels.

After bouncing from the support around $2,645, gold has established a steady climb along a rising trendline, as seen on the 4-hour chart.

Key levels to watch include the pivot point at $2,660, with immediate resistance at $2,672. If this level is broken, the next resistance levels are $2,685 and $2,698.

On the downside, immediate support lies at $2,646, followed by $2,635 and $2,625.

The RSI is currently at 62.22, suggesting that while there is room for further upside, traders should monitor for overbought conditions.

The 50-period EMA at $2,645 continues to provide dynamic support, and as long as gold stays above this level, the bullish outlook remains intact.