Gold prices have been fluctuating in recent sessions, trading within a tight range as traders await the results of the 2024 US presidential election. Spot gold was steady at $2,737, oscillating between $2,725 and $2,750 per ounce. The December MCX gold contract in India was trading slightly higher at Rs 78,452, reflecting a modest 0.04% increase.
US Dollar and Yields Influence Market Movements
The US Dollar Index stood at 103.57, marking a decline of nearly 0.30% for the day. However, US Treasury yields saw a sharp uptick, driven by the latest ISM services data. The 10-year US Treasury yield surged to 4.358%, rising 1.7% on the day, while the 2-year yield climbed to 4.23%, up by approximately 1.5%.
The Institute for Supply Management (ISM) reported a rise in the US ISM services index, reaching 56, surpassing the forecast of 53.80. The employment component of the index showed strong expansion, and ISM prices paid also exceeded expectations, further contributing to market volatility.
Upcoming US Economic Data and Central Bank Decisions
Important US economic data will be released shortly, including unit labor costs and weekly jobless claims. Additionally, the Federal Open Market Committee (FOMC) will announce its monetary policy decision on November 7. Analysts anticipate a 25 basis point rate cut, bringing the federal funds rate to a range of 4.50% to 4.75%. Meanwhile, the Bank of England will also announce its monetary policy decision on the same day, with expectations of a 25 basis point reduction to 4.75%.
Gold ETFs and Coin Sales
Global gold ETF holdings saw a slight decrease, standing at 83.857 million ounces on November 11, down from 83.969 million ounces the previous week. The US Mint reported American Eagle gold coin sales of 25,000 ounces in October, down from 27,000 ounces in September.
Outlook for Gold Prices Amid US Election Uncertainty
Looking ahead, gold prices are expected to remain volatile as the US election results unfold. A quick election outcome might dampen the metal’s momentum, but uncertainty surrounding the election is likely to support gold prices in the short term.
If Donald Trump secures a second term in office, market expectations point to a potential increase in Sino-US trade tensions, which could be positive for gold. Moreover, concerns over the growing US fiscal deficit, rising debt-to-GDP ratio, and ongoing geopolitical and inflationary pressures would likely boost gold’s appeal. Despite potential initial volatility, with gold possibly dipping due to higher US yields and a stronger dollar, traders are advised to buy the dips, as the fundamental outlook remains favorable for gold over the medium to long term.
Conversely, if Kamala Harris were to win the presidency, gold might face downward pressure. Her policies are expected to focus on sustainable growth and less inflationary measures, which could lead to lower borrowing and a more stable economic environment, weighing on gold’s appeal.
Gold Price Support and Resistance Levels
As the election draws closer, gold is expected to experience heightened volatility, with fluctuations in both directions. For now, support for gold is seen at $2,700 (Rs 77,400), $2,685 (Rs 77,000), and $2,600 (Rs 74,500), while resistance is noted at $2,760 (Rs 79,100), $2,800 (Rs 80,200), and $2,850 (Rs 81,700).
In the medium to long term, regardless of the election outcome, gold is expected to perform well, supported by ongoing fiscal and geopolitical uncertainties.
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