Gold price (XAU/USD) remains steady just below its recent all-time high during the European session on Monday. Despite some selling pressure, the price is holding its ground. Several factors, including China’s economic stimulus, continue to influence market sentiment, making investors more willing to take risks, which supports the precious metal. At the same time, concerns over potential conflicts in the Middle East are helping to maintain gold’s appeal as a safe-haven asset, limiting any significant downturn.
Global Factors Affecting Gold Price
One of the main factors supporting gold’s stability is the growing possibility of the Federal Reserve lowering interest rates by 50 basis points in its upcoming policy meeting in November. Lower borrowing costs generally support non-yielding assets like gold. Meanwhile, the US Dollar (USD) remains relatively stable, consolidating after touching its lowest level since July 2023, which also suggests that the upside potential for gold remains intact.
Geopolitical Tensions and Gold Price
Rising geopolitical tensions, especially in the Middle East, continue to support gold’s position as a preferred safe-haven asset. Israel has intensified its military actions, targeting areas linked to Iran’s allies in Yemen and Lebanon. Israeli airstrikes over the weekend killed Nabil Kaouk, a top Hezbollah leader. These developments have raised concerns that the conflict might escalate further, drawing in major global powers like the United States. Such uncertainties keep investors leaning towards gold as a safer option.
Federal Reserve Expectations and Gold
Market expectations about the Federal Reserve’s policy play a significant role in influencing gold prices. The current sentiment points towards another 50 basis point rate cut in November, following a similar move in September. St. Louis Fed President Alberto Musalem hinted that interest rate cuts might happen gradually after this substantial reduction. While a dovish Fed stance generally weighs on the US Dollar, it helps support gold prices.
China’s Economic Measures Impact on Gold
China’s recent announcement of various economic stimulus measures continues to shape global market sentiment. On Sunday, the People’s Bank of China announced further steps to boost its housing market, asking banks to lower mortgage rates by the end of October. This follows a wave of supportive fiscal and monetary policies, the largest since the pandemic. However, while China’s official Manufacturing PMI improved slightly in September, other key indicators, including the Caixin Manufacturing PMI, fell into contraction, exerting some downward pressure on gold.
Technical Outlook on Gold Price
From a technical perspective, gold remains supported above a key ascending channel near the $2,625 region. This support level, if breached, could see prices drop to $2,600, with further declines potentially reaching the $2,560 range. Conversely, on the upside, the immediate resistance sits near the $2,670-2,671 area, followed by the record highs of $2,685-2,686. If gold breaks through these levels, the $2,700 psychological mark could come into focus, setting the stage for further gains.
Conclusion
In summary, gold prices remain balanced due to mixed market factors, including geopolitical risks, Fed rate expectations, and China’s economic measures. Traders are now awaiting Federal Reserve Chair Jerome Powell’s speech for further clarity on future monetary policy, which could offer new momentum for the market.
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