- Gold price gains positive traction for the fourth successive day and jumps to a fresh all-time peak.
- Major central banks remain in rate-cut mode and continue to benefit the non-yielding XAU/USD.
- Middle East tensions and the US political uncertainty provide an additional boost to the commodity.
Gold price (XAU/USD) scales higher for the fourth straight day – also marking the sixth day of a positive move in the previous seven – and climbs beyond the $2,700 mark, hitting a fresh record high during the Asian session on Friday. The expected rate cuts by major central banks, along with Middle East tensions and the uncertainty surrounding the US Presidential election, turn out to be key factors underpinning the precious metal.
Meanwhile, the upbeat US data released on Thursday reaffirmed expectations that the Federal Reserve (Fed) will proceed with modest interest rate cuts. This had been the main reason behind the recent upswing in the US Dollar (USD), to its highest level since early August. The negative factor, however, does little to dent the underlying strong bullish sentiment around the Gold price, which remains on track to register strong weekly gains.
Daily Digest Market Movers: Gold price benefits from geopolitical risks, rate-cut bets and US political uncertainty
- On Thursday, the European Central Bank decided to lower interest rates for the third time this year – marking the first back-to-back rate cut in 13 years – and eyes more cuts in the wake of the worsening economic outlook.
- The Federal Reserve is also anticipated to lower borrowing costs further after a jumbo rate reduction in September, while weak inflation data from the UK solidified bets for a more aggressive easing by the Bank of England.
- Meanwhile, the tight race between Donald Trump and Kamala Harris adds a layer of uncertainty, which, along with the risk of a further escalation of conflicts in the Middle East, lift the Gold price to a fresh all-time high.
- The Israeli military confirmed that Hamas leader Yahya Sinwar had been killed on Wednesday after a “year-long pursuit”, while the Iran-backed Hezbollah announced a new and escalating phase in its war with Israel.
- Data published by the US Census Bureau on Thursday showed that Retail Sales increased by 0.4% in September, surpassing market expectations for a 0.3% monthly gain and a 0.1% rise recorded in the previous month.
- Separately, the US Labor Department reported that Initial Jobless Claims, after hitting the highest level in more than a year, fell to 241K in the week that ended October 12 against the anticipated reading of 260 K.
- Furthermore, the Philadelphia Federal Reserve’s manufacturing sector survey revealed that the business conditions index rose from 1.7 to 10.3 in October, beating consensus estimates by a wide margin.
- The data suggested that the economy remains on solid footing and reaffirmed bets for a less aggressive Fed policy easing, lifting the US bond yields and the US Dollar, albeit doing little to dent demand for the XAU/USD.
- Meanwhile, the markets react little to the latest Chinese macro data, which showed that the world’s second-largest economy expanded by 0.9% in the third quarter of 2024, while the annual growth rate stood at 4.6%.
- Traders now look to the US housing market data – Building Permits and Housing Starts – and Fed Governor Christopher Waller’s scheduled speech to grab short-term opportunities on the last day of the week.
Technical Outlook: Gold price finds acceptance above $2,700, technical setup supports prospects for further gains
From a technical perspective, a sustained move beyond the $2,700 mark comes on the back of this week’s breakout above the $2,670-2,672 supply zone and could be seen as a fresh trigger for bullish traders. This, along with the fact that oscillators on the daily chart are holding in positive territory and are still away from being in the overbought zone, suggests that the path of least resistance for the Gold price is to the upside.
On the flip side, any meaningful corrective slide now seems to find decent support near the $2,662-2,660 horizontal zone ahead of the $2,647-2,646 area. A convincing break below the latter might prompt some technical selling and drag the Gold price to the $2,630 intermediate support en route to the $2,600 neighborhood. The latter should now act as a strong base for the XAU/USD and a key pivotal point for short-term traders.
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