- Gold is up 0.98% at $2,720 as geopolitical tensions and US election concerns drive demand for the safe-haven asset.
- Falling US Treasury yields and a weakening US dollar further boost bullion prices, with the US dollar index falling to 103.45.
- Analysts are predicting continued gains for gold, with Citi’s Max Layton predicting that prices could reach $3,000 an ounce within 6-12 months.
Gold prices continued to hit record highs after breaching $2,700 amid uncertainty around the US election and tensions in the Middle East. This weighed on US Treasury yields and the dollar, which fell to a two-day low of 103.45 after hitting a two-month high of 103.87. At the time of writing, the XAU/USD rate is at $2,721, up 1.09%.
Market sentiment remains upbeat as Wall Street reports modest gains. Meanwhile, geopolitics came into the spotlight after Israel confirmed the death of Hamas leader Yahya Sinwar. Meanwhile, Hezbollah said it was escalating its confrontation with Israel after US Defense Secretary Austin commented that the Hamas leader’s death could provide an opportunity for a ceasefire.
According to Kann News, US Secretary of State Antony Blinken told Israeli President Isaac Herzog that he is expected to arrive in the coming days to discuss a ceasefire agreement.
Bullion prices continued to gain following Hezbollah’s threat to escalate the conflict. The XAU/USD rate surged above $2,700 and reached an all-time high of $2,720.
Alexander Zumpfe, precious metals trader at Heraeus Metals Germany, commented that in addition to geopolitics, “concerns around the US presidential election and expectations for looser monetary policy further fueled the rally.”
Major central banks are expected to continue easing policy. During the week, UK inflation in September was above the Bank of England’s (BoE) target of 2% and stood at 1.7% y/y, sparking speculation about a BoE rate cut. Yesterday, the European Central Bank (ECB) cut borrowing costs after inflation fell to 1.7%, below the ECB’s target.
As a result, global yields fell, which was a tailwind for the non-trading metal. The US 10-year Treasury yield fell two basis points (bps) on the day to 4.073% after hitting a weekly high of 4.142%.
Gold has hit multiple record highs throughout the year and is up 30% year-to-date. Max Layton, global director of commodity research at Citi, predicts gold prices will reach $3,000 an ounce in the next six to 12 months.
Still, the Fed is expected to cut interest rates by 25 basis points at its November meeting. Rates remained at 92.9%, according to CME FedWatch Tool data.
Daily summary of market changes: gold price is rising, ignoring hopeful data from the US
- U.S. building permits in September fell 2.9%, from 1.47 million to 1.428 million, with a missing estimate of 1.46 million.
- September home construction starts decreased by -0.6%, from 1.361 million to 1.354 million.
- Data from the Chicago Board of Trade, based on the December federal funds rate futures contract, show that investors estimate the Fed will cut interest rates by 48 basis points (bps) by the end of the year.
XAU/USD Technical Outlook: Gold Price Surges Above $2,700, $2,750 Expected
The rise in gold prices remains unchanged. Momentum supports the bulls, as illustrated by the relative strength index (RSI), which rose and ended up overbought, although with no signs of consolidation.
Given this situation, the path of least resistance is upwards. Gold’s first resistance will be $2,750 and then $2,800.
Conversely, if XAU/USD falls from record highs below $2,700, it could pave the way for a pullback. The first support will be the October 17 high of $2,696, followed by the October 4 high of $2,670.
