Gold Price Forecast: XAU Holds Near $2,755 Amid Election Uncertainty; What’s Next?
Gold prices remain close to record levels this week, driven by political and economic uncertainty as the U.S. presidential election and a critical Federal Reserve decision draw near.
Spot gold climbed 0.5% to $2,755.42 per ounce early Tuesday, following last week’s record peak of $2,758.37. Meanwhile, U.S. gold futures rose 0.4% to $2,768.10, as investors turned to the precious metal as a hedge against potential volatility.
IG Market Strategist Yeap Jun Rong noted that “the lead-up to the U.S. elections may provide traction for gold’s role as a hedge against market instability,” especially as the U.S. dollar and Treasury yields saw temporary declines overnight.
Analysts believe that gold prices may continue to hold strong, particularly if expectations solidify around a smaller Fed rate cut in November.
Key Economic Data and Fed Rate Outlook
The Federal Reserve’s upcoming decision on interest rates, scheduled just eight days from now, is anticipated to significantly impact gold prices. Investors are looking ahead to several critical U.S. economic indicators that will inform the Fed’s decision, including:
U.S. Job Openings: Due at 1400 GMT today
ADP Employment Report: Expected on Wednesday
Personal Consumption Expenditures (PCE): Scheduled for Thursday
U.S. Payrolls Report: To be released on Friday
The CME’s FedWatch tool currently places the likelihood of a 25-basis-point rate cut at nearly 98%, signaling strong market consensus. Lower rates generally benefit gold by reducing the opportunity cost of holding the non-yielding asset, further reinforcing its appeal as a safe-haven during political and economic upheaval.
Rising Geopolitical Tensions Boost Gold’s Safe-Haven Appeal
Gold’s resilience is also bolstered by recent developments in the Middle East, where at least 60 people were reported killed in Israeli strikes on Lebanon’s eastern Bekaa Valley.
The intensifying geopolitical tensions add another layer of support for gold, as investors often turn to the asset in times of conflict and uncertainty.
#Gold prices lingered near record highs on Tuesday, supported by uncertainty surrounding upcoming US presidential election, while investors awaited key economic data for clues on @federalreserve 's interest rate trajectory. Prices hit record high of $2,772/oz.
— Neha Anand (@Neha_1007) October 29, 2024
With the U.S. election only days away, gold’s position as a refuge asset could strengthen if geopolitical and economic risks escalate.
Technical Analysis: Gold Poised for Further Gains
Technically, gold’s recent breakout from a symmetrical triangle pattern near the $2,747 mark indicates a potential bullish trajectory. Immediate resistance is positioned at $2,757, and surpassing this level could pave the way to $2,773–$2,775.
The 50-day Exponential Moving Average (EMA) at $2,739 serves as crucial support, suggesting a steady upward trend.
The Relative Strength Index (RSI) currently sits at 64.95, pointing to moderate buying momentum without veering into overbought territory.
This indicates that there may be further room for gains if the momentum holds. Should selling pressure emerge, initial support is expected around $2,747, with further stability likely near $2,725 and $2,717.
Key Takeaways:
Election and Fed Impact: Gold’s strength is supported by U.S. election uncertainty and the Fed’s upcoming rate decision.
Technical Breakout: A breakout above $2,747 suggests bullish momentum, with key resistance at $2,757 and potential upside to $2,775.
Support Levels: Gold’s support is reinforced at $2,747 and $2,739, with downside protection at $2,725 if a pullback occurs.
As investors await pivotal data and developments, gold remains positioned as a robust safe-haven asset, poised to navigate the intersecting forces of economic policy and global political risks.