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.

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.

GOLD Price Chart - Source: Tradingview

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.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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