Gold Prices Surge to $2,691 Amid US Election Uncertainty
- Gold hits record high of $2,691 as uncertainty looms over US elections
- US Dollar Index reaches two-month high, capping Gold’s advance
- Traders reduce bets on Fed rate cut, odds drop to 88.2% for November
Gold prices soared to a new peak during the North American session on Thursday, reaching $2,691, driven by uncertainty surrounding the upcoming US elections. Despite positive Retail Sales and job data in the US, the precious metal continued its upward trajectory. At the current moment, the XAU/USD pair is trading at $2,691, marking a gain of over 0.66%.
Impact of US Economic Data on Gold Prices
The US Department of Commerce reported a slight increase in Retail Sales, surpassing expectations. Concurrently, the US Labor Department released favorable job data, which had a downward effect on Bullion prices.
Movement in US Treasury Yield and Dollar Index
Following the data release, the US 10-year Treasury yield rebounded to 4.096%, while the US Dollar Index climbed to a two-month high, reaching 103.79. Despite these movements, Gold managed to recover some ground, resisting the strength of the US Dollar.
Impact on Fed Rate Cut Expectations
Traders adjusted their expectations regarding a Federal Reserve rate cut towards the end of the year. The probability of a 25-bps rate reduction in November decreased from 94% to 88.2%, indicating a shift in sentiment among investors.
“The upcoming US election, coupled with uncertainties in the Middle East, are key factors driving the current market dynamics. Gold, being a traditional safe-haven asset, tends to attract investors during times of uncertainty,” noted Niteh Shah, a strategist at WisdomTree.
Daily Digest: Key Market Updates Affecting Gold Prices
- US Retail Sales for September exceeded estimates, rising by 0.4% month-on-month.
- Initial Jobless Claims for the week ending October 12 came in below expectations at 241K.
- US Industrial Production contracted by -0.3% in September.
- Investors anticipate 48 basis points of Fed easing by year-end based on futures contract data.
Technical Analysis: XAU/USD Outlook
Gold’s upward momentum remains strong, with potential for the XAU/USD price to reach $2,700 in the short term. The Relative Strength Index (RSI) indicates bullish momentum, with key resistance levels at $2,696, $2,700, $2,750, and $2,800. On the downside, support levels are at $2,670, $2,650, $2,600, and the 50-day Simple Moving Average at $2,561.
Gold FAQs
- Role of Gold: Gold is viewed as a safe-haven asset, a hedge against inflation, and a store of value.
- Central Banks and Gold: Central banks hold significant Gold reserves to strengthen their currencies and instill trust in the economy.
- Correlation with USD and Treasuries: Gold prices have an inverse relationship with the US Dollar and US Treasuries, making it a diversification option in turbulent times.
- Factors Affecting Gold Prices: Geopolitical instability, economic conditions, and USD movements can impact Gold prices significantly.