The gold price (XAU/USD) increased slightly on Thursday, recovering from the recent drop from its $2,760 peak. Rising tensions in the Middle East and uncertainty around U.S. politics are helping gold stay strong. Additionally, U.S. Treasury bond yields dropped, leading to some profit-taking in the U.S. dollar, which supported gold prices.
Gold Rises with Middle East Conflicts and U.S. Political Concerns
Gold’s price reached the $2,736-$2,737 level during early European trading. However, expectations of a slower pace of interest rate cuts by the Federal Reserve have limited any big gains. Concerns about higher U.S. deficits after the upcoming presidential election also add pressure to U.S. bond yields. These factors are making traders cautious about betting too much on gold right now.
Key Market Drivers: U.S. Election and Middle East Tensions
On Wednesday, the U.S. dollar and Treasury bond yields hit their highest in three months, causing a brief pullback in gold prices. Strong U.S. economic data suggested that the economy is in good shape, reducing hopes for significant rate cuts from the Federal Reserve. Fed officials have hinted at smaller interest rate cuts in the coming year.
The FedWatch Tool shows a 90% chance that the Fed will cut rates by 25 basis points in November. There’s also speculation about inflationary tariffs if Donald Trump wins the U.S. election. Investors are also worried about the growing U.S. deficit under either Vice President Kamala Harris or Trump.
Tensions in the Middle East continue to support gold as a safe investment. Israel launched airstrikes in Lebanon after Hezbollah attacked bases near Tel Aviv. There’s also a fear of an Israeli strike on Iran, following their missile attack earlier this month, which keeps gold prices high.
Technical Outlook: Gold Bulls Watching $2,700 for Direction
Technically, the recent fall below a short-term trend may signal some bearish activity. Chart indicators suggest a potential downward trend, but a strong break below $2,700 is needed to confirm this. However, if gold stays above $2,700, it could keep rising. Resistance levels are found at $2,730-$2,732 and then at $2,750. If prices break through, gold could continue rising toward $2,800.
Conclusion
Gold’s price is currently supported by global tensions and political uncertainty in the U.S. Investors remain cautious because of the approaching U.S. election and the continuing conflicts in the Middle East. A clearer direction for gold may emerge after the election and further developments in the region.
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