• Sun. Nov 3rd, 2024

Gold Prices Rise Slightly as US Bond Yields Fall and Dollar Weakens

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  • Gold is gaining momentum and is continuing its pullback from all-time highs overnight.
  • The decline in US bond yields has led to some gains in the US dollar, which is a positive development for gold/dollar.
  • Geopolitical risks and political uncertainty in the US caused increases during the day.

Gold prices (XAU/USD) fell to around $50 an ounce after reaching a new record high near $2,760 in mid-Wednesday. The daily report showed a rise in U.S. Treasury yields and a strengthening U.S. dollar amid a slightly overbought environment, providing some gains around non-yielding gold. Still, political uncertainty in the U.S. ahead of the Nov. 5 presidential election and the crisis in the Middle East helped keep the stock market steady ahead of the $2,700 level.

Gold buyers lost some ground in the Asian session on Thursday, as the US dollar eased from its highest level since July 30 and US bond yields eased. However, concerns about the fiscal deficit following the US elections and expectations that the Fed will cut interest rates could have a negative impact on the dollar and US bond yields. Also, signs of stability in the stock market could limit XAU/USD’s move. Investors are now looking for quick PMI readings to gain fresh insights into the global economy and the short term.

Daily Summary Market Movements: Gold prices attract some hunters, supported by multiple factors

  • The rise in dollar and US Treasury yields to their highest levels in the last three months led to a healthy weekend for gold prices.
  • Upcoming key US macro data suggests the economy remains strong and expectations for tighter Fed policy are dim.
  • Furthermore, the recent comments from a slew of influential Fed officials suggested the central bank will proceed with modest interest rate cuts over the next year.
  • The CME Group’s FedWatch Tool indicates that traders are pricing in over a 90% chance that the Fed will lower borrowing costs by 25 basis points in November.
  • Meanwhile, the odds of former President Donald Trump winning the November 5 US Presidential election fuel speculations about the launch of inflation-generating tariffs.
  • Investors remain concerned that the spending plans of both Vice President Kamala Harris and the Republican nominee Donald Trump will further increase the deficit.
  • The Israeli army carried out strikes in southern Lebanon and a Beirut suburb after Hezbollah fired rockets at two bases near Tel Aviv and west of Haifa.
  • This comes ahead of a possible attack on Iran in retaliation for Israel’s missile strike on October 1, providing support to XAU/USD.

Technical Outlook: Gold price pattern should be bullish, be careful, short-term ascending channel collapse is possible

From the perspective, an overnight break below the short-term uptrend channel support will be seen as a new outcome for the bearish market. Also, negative oscillators on the hourly chart point to gold’s minimum resistance being on the downside. However, before preparing for further losses, the trust should wait carefully for a break below the $2,700 level. After that, XAU/USD is likely to correct below the $2,685 support level and eventually reach a break of the strong horizontal line at $2,672-2,670.

On the other hand, a rise to the support channel breakout (around the $2,730-2,732 area) now seems like an urgent concern. The next impact is near the $2,750 area, above which gold will resume its uptrend and rise to the $2,770-2,775 area before moving to the $2,800 target.