Gold Prices Near $2,782 All-Time High; Investors Brace for U.S. Election and Fed Rate Decision
Gold prices soared to new heights this Wednesday, as anxious investors turned to the safe-haven asset in anticipation of the U.S. presidential election and critical economic indicators.
Spot gold gained 0.2% to $2,779.39 per ounce in early Asian trading, having reached an unprecedented high of $2,782.03 earlier. Meanwhile, U.S. gold futures rose by 0.4%, touching $2,791.70. The surge reflects broader market uncertainty, with analysts forecasting continued bullish momentum.
Gold climbs as Fed rate decision looms! Markets now expect a 25 basis points cut next week, favoring gold with reduced opportunity costs. #GoldInvesting #FederalReserve #InterestRates
— The Forex Index (@theforexindex) October 29, 2024
“Gold is very much anchored to the U.S. election outcome,” said Kelvin Wong, senior market analyst at OANDA.
He anticipates spot gold to face resistance at $2,800 and subsequently at $2,826, depending on market sentiment and economic data due later this week.
Recent polls suggest a highly competitive race between candidates Donald Trump and Kamala Harris, adding to gold’s appeal as a hedge against potential market volatility.
The Fed’s Potential Rate Cut and Inflation Impact on Gold Prices
In addition to election-driven demand, expectations of another U.S. interest rate cut have fueled gold’s rally. The Federal Reserve is widely expected to lower short-term borrowing costs by a quarter-point next week. Such a reduction would further diminish the opportunity cost of holding non-yielding assets like gold, making it more attractive for investors seeking a safe store of value.
This week’s U.S. economic data, including the ADP employment report and the Personal Consumption Expenditures (PCE) index, will play a key role in shaping market expectations for Fed policy.
Strong jobs data or unexpectedly high inflation figures could temper gold’s rally, as such indicators might reduce the Fed’s urgency to cut rates.
“Hot inflation numbers or a strong jobs report could derail gold’s upward momentum,” warned Wong.
Meanwhile, Goldman Sachs recently revised its year-end 2025 forecast for gold to $3,000 per ounce from an earlier projection of $3,080. The investment bank still maintains a positive outlook, citing a 7% upside potential driven by demand for gold-backed exchange-traded funds (ETFs).
Global Demand for Gold Remains Robust Despite High Prices
Beyond the U.S., retail demand for gold remains resilient in major markets like India. Despite record-high prices, Indian consumers continued purchasing gold in the run-up to the Dhanteras and Diwali festivals, driven by cultural expectations and hopes of further price appreciation amid a cooling stock market.
US gold futures edged past $2,760. With just eight days until Fed's rate decision, a series of critical events is set to influence US central bank's choice. Data this week features US job openings, ADP employment, US PCE, and payrolls report.
— Neha Anand (@Neha_1007) October 29, 2024
Gold’s appeal as a safe haven is not limited to election risks or rate cuts; global uncertainties have made it an attractive asset for investors worldwide. This broad demand supports an optimistic long-term outlook for the precious metal, even as prices flirt with historic levels.
Gold Technical Analysis: Potential for Further Upside, Caution Advised
Gold (XAU/USD) currently trades around $2,780, maintaining an upward trajectory after breaking out from a symmetrical triangle pattern—a bullish sign in technical analysis.
This breakout positions gold above a critical pivot at $2,775, with immediate resistance set at $2,788, followed by $2,796 and a strong barrier at $2,804.
On the support side, the 50-day Exponential Moving Average (EMA) at $2,747 offers near-term stability. If selling pressure intensifies, additional support levels lie at $2,745 and $2,737, which could prevent a significant pullback.
The Relative Strength Index (RSI) sits at 76, suggesting that gold is in overbought territory. This level often signals a potential for short-term correction; however, as long as gold stays above the $2,775 pivot, bullish momentum could persist.
Traders should watch for price reactions at the $2,788 resistance level to assess the likelihood of a continued rally or a potential retracement.
Key Takeaways:
Gold reached a new high of $2,782.03 as investors seek safety before the U.S. election.
Upcoming Fed rate cuts and inflation data are pivotal in determining gold’s near-term trajectory.
Technical indicators suggest a bullish outlook, but the overbought RSI signals caution for potential pullbacks.
With both fundamental and technical indicators pointing towards volatility, investors are advised to stay alert to market movements in the coming days. Whether gold pushes higher or consolidates will depend on the Fed’s next move and how the upcoming U.S. economic reports shape expectations.
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