Gold prices (XAU/USD) are holding steady this Monday, attracting investors during uncertain times. Concerns around the upcoming U.S. presidential election and rising Middle East tensions make gold, a trusted safe-haven asset, a popular choice. However, rising U.S. bond yields and a stronger U.S. Dollar could limit gold’s gains, as higher yields make gold less appealing for investors.
How the U.S. Election and Fed Decision Affect Gold Prices
With the U.S. presidential election happening on Tuesday, the market is paying close attention to the possible impact on gold prices. Investors also await the Federal Reserve’s decision on interest rates, expected on Thursday. Many experts believe that the Fed may cut interest rates by 25 basis points (bps) to calm any economic uncertainty after the election. This rate cut could influence gold prices, as lower rates typically support safe-haven assets like gold.
Market Trends Supporting Gold: ETFs, Central Banks, and Jewelry Demand
Gold demand could stay high due to potential rate cuts, the U.S. budget deficit, and elevated stock market values. Commerzbank analysts point out that ETFs (Exchange-Traded Funds) may see more investments for these reasons. However, demand in the fourth quarter will likely depend on the U.S. election outcome. While central banks are expected to keep buying gold, their purchases may not reach the levels seen in recent years. Jewelry demand is also expected to rise slightly, as per the World Gold Council.
U.S. Economic Data and Predictions for Gold Prices
The PredictIt platform currently shows a 51% chance of Vice President Harris winning, marking her first lead since early October. Recent U.S. economic data reveals that Nonfarm Payrolls (NFP) increased by just 12,000 in October, the smallest gain since December 2020, and below the expected 113,000 rise. The unemployment rate remained at 4.1% for October, matching forecasts. Based on these indicators, markets expect a 25-bps rate cut from the Federal Reserve at its meeting on Thursday.
Technical Analysis: Gold’s Positive Long-Term Outlook
Technically, gold prices show strength by staying above the key 100-day Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI) is also above 50, around 60.20, suggesting this support level could hold. If momentum continues, XAU/USD may target the psychological $2,850 mark, with resistance around the $2,790-$2,800 range. On the downside, a drop below $2,715 could push prices to $2,624 or even $2,600.
For daily insights and updates on gold prices, visit our daily gold update. You can also explore the latest trends in the gold market at Daily Gold Signal.
