Gold price (XAU/USD) stayed strong during the Asian session on Tuesday, close to the record high of $2,740-$2,741. Several things are keeping gold prices up, like the uncertainty about the US Presidential election on November 5, worries about conflict in the Middle East, and expected interest rate cuts from central banks.
Why Gold Prices Remain High Even with Rising US Bond Yields
US bond yields are going up because of expected smaller interest rate cuts from the Federal Reserve (Fed) in November. However, gold prices are still holding firm. The US Dollar (USD) is also strong, reaching its highest point since August. Although gold prices seem slightly overbought, traders are cautious about making new bets. With no major US economic data being released, gold continues to be supported by market worries.
Factors Helping Gold Prices
Tensions in the Middle East are pushing gold price higher. For example, a recent incident between Lebanon and Israel raised fears of more conflict. The European Central Bank (ECB) also cut interest rates for the third time this year, making it the first back-to-back cut in over 10 years. In the UK, weak inflation data led to hopes for bigger rate cuts by the Bank of England, with the Fed expected to do the same soon.
The US Presidential election is also affecting markets. Current polls show a close race between Vice President Kamala Harris and former President Donald Trump. If Trump wins, there is fear that new tariffs might increase inflation, which is pushing US bond yields up to three-month highs. Still, gold prices are staying strong.
Technical Analysis of Gold Prices
Looking at the charts, gold prices have been going up steadily over the last two weeks. They are moving in an upward channel, which suggests that the trend is still strong. Prices could go up to $2,750 soon. However, the Relative Strength Index (RSI) shows that gold might be slightly overbought, so prices could pause or pull back a little before going higher again.
If prices drop, there is support around $2,720 and stronger support near $2,710. A bigger drop could push prices below $2,700, with further support at $2,685. If prices fall even more, $2,661 is another key support level to watch.
Conclusion
Even though rising bond yields and a strong dollar usually weigh on gold, it remains strong due to global issues and expectations of interest rate cuts. Traders should stay cautious because of the chance of a small pullback but may look for opportunities afterward.
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