Recent data from betting markets suggests that the probability of Donald Trump winning the US election has increased significantly. This has reignited the “Trump Trade” narrative, which has had a positive impact on Gold (XAU/USD).
One of the key factors driving this trend is Trump’s proposal to cut corporate tax rates, which could lead to a wider federal deficit and raise concerns about the US government’s credit standing. This, in turn, has led to increased demand for Gold as a safe-haven asset.
Furthermore, Trump’s policies, including tax and trade tariffs, are expected to fuel inflationary pressures in the medium to long term. Combined with ongoing geopolitical risks in the Middle East, this could lead to stagflation and a potential risk-off episode in global financial markets.
Technical analysis also supports the bullish outlook for Gold, with the price consistently trading above key moving averages and trendline supports. The medium-term uptrend for Gold remains intact, with potential resistance levels at US$2,850/886 and US$2,933, while key support levels to watch out for are at US$2,590, US$2,484, and US$2,360.
Overall, the recent surge in Gold prices is driven by a combination of factors, including the “Trump Trade” narrative, inflationary pressures, geopolitical risks, and technical indicators. Investors should closely monitor these developments to make informed decisions about their portfolios.