During the Asian session on Tuesday, gold prices (XAU/USD) exhibited a strong upward trend, reaching around $2,758 per ounce.
Investors are increasingly turning to gold as a safe-haven asset due to rising geopolitical tensions and uncertainty surrounding the upcoming U.S. elections. Declining U.S. Treasury yields have put pressure on the dollar, enhancing gold’s appeal. Additionally, expectations that the Federal Reserve may take a cautious approach in easing policies post-election have boosted demand for gold.
Gold’s rise has been supported by falling U.S. Treasury bond yields, which have weakened the dollar. Recent indications from the Federal Reserve suggest that rate cuts may be less aggressive than previously expected. Concerns that increased government spending after the election could elevate inflation have capped bond yield declines, further increasing gold’s value as a hedge against economic uncertainty.
The recent dip in the dollar has provided additional support for gold, especially as Treasury yields remain low. Investors are awaiting key U.S. economic data later this week, including third-quarter GDP, the Personal Consumption Expenditures (PCE) Price Index, and Nonfarm Payrolls (NFP) data, which will offer insights into the Fed’s likely policy direction. Key indicators such as the Consumer Confidence Index and Job Openings and Labor Turnover Survey (JOLTS) are also anticipated to impact market sentiment regarding U.S. interest rates.
Political uncertainty surrounding the U.S. presidential election is further driving safe-haven demand for gold. The race between Vice President Kamala Harris and Republican nominee Donald Trump is closely contested, raising concerns about potential economic shifts following the election.
In addition, rising tensions in the Middle East have added upward pressure on gold prices, as fears of possible retaliatory actions grow.
However, in China, demand for gold has declined, with jewelry consumption down 11.18% in the first three quarters of 2024 due to high prices, indicating that elevated costs are affecting demand.
Currently, gold is trading around $2,749, flirting with the pivot point at $2,747.77. Key resistance levels are identified at $2,757.81 and $2,766.51, with a notable double-top pattern around $2,757 acting as a significant barrier for further upward movement. If the price breaks through this resistance level, we could see increased bullish momentum. Conversely, a drop below the immediate support at $2,739.77 might lead to declines toward subsequent support levels at $2,728.21 and $2,722.44.
With the 50-day EMA at $2,740.03 and the 200-day EMA at $2,720.10, gold’s near-term trend appears cautious. A move above $2,757 would signal stronger bullish sentiment.
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