Gold prices continue their steady intraday climb, edging closer to $2,730 as the US Dollar experiences a modest pullback

Gold (XAU/USD) attracted dip-buying during the Asian session on Thursday, halting its overnight pullback from a new record high. Uncertainty surrounding the upcoming November 5 US Presidential election and tensions in the Middle East continue to support the safe-haven metal. In addition, falling US Treasury bond yields have triggered profit-taking in the US Dollar (USD), offering further support to gold, a non-yielding asset.

However, expectations for smaller interest rate cuts by the Federal Reserve (Fed) and concerns about deficit spending post-election are likely to limit any sharp drops in US bond yields. This supports USD bulls, suggesting caution before making fresh bullish bets on gold and predicting the continuation of its recent uptrend. Traders now turn their attention to the release of flash PMI data for fresh insights into the global economy and potential market catalysts.

• The USD and US Treasury bond yields surged to a three-month high, triggering profit-taking in gold on Wednesday.

• Strong US macroeconomic data dampened hopes for more aggressive Fed rate cuts.

• Comments from several Fed officials indicated the central bank is likely to proceed with modest rate reductions over the coming year.

• The CME Group’s FedWatch Tool shows traders pricing in a 90% chance of a 25-basis-point rate cut in November.

• Speculation about former President Donald Trump’s potential victory in the November 5 election has fueled concerns over inflationary tariffs.

• Concerns about deficit expansion due to the spending plans of both Vice President Kamala Harris and Republican nominee Donald Trump persist.

• Israel’s military conducted airstrikes in southern Lebanon and Beirut’s suburbs after Hezbollah launched rockets at bases near Tel Aviv and Haifa.

• Rising tensions over a potential Israeli strike on Iran, in retaliation for Iran’s October 1 ballistic missile attack, continue to support gold prices (XAU/USD).

From a technical standpoint, gold’s breakdown below a short-term ascending trend-channel support overnight could be a new signal for bearish traders. Additionally, negative oscillators on hourly charts indicate that gold may face further downside pressure. However, a decisive break below $2,700 is needed before positioning for further losses. If gold dips below this level, it could accelerate towards the $2,685 support, with stronger resistance at the $2,672-$2,670 area.

On the upside, the $2,730-$2,732 region, which now serves as the previous channel support, could act as an immediate hurdle. Above this, the next key resistance is near $2,750, and a break above that level could resume gold’s uptrend, targeting the $2,770-$2,775 zone, and potentially aiming for the $2,800 mark.