Gold prices hold steady amid uncertainty surrounding the U.S. presidential election

The Gold price (XAU/USD) is trading positively on Monday, supported by the risks associated with the U.S. presidential election and ongoing geopolitical tensions in the Middle East. These factors are likely to bolster demand for the yellow metal, which is traditionally seen as a safe haven. However, renewed demand for the U.S. Dollar and rising U.S. bond yields may limit gold's upside, as higher yields make non-yielding assets like bullion less appealing.

Investors are keenly awaiting the results of the U.S. presidential election on Tuesday, with attention turning to the Federal Reserve’s rate decision scheduled for Thursday. Market speculation suggests that the uncertainty surrounding the election could lead the Fed to implement a more modest rate cut of 25 basis points (bps) rather than a larger half-point reduction.

Daily Digest Market Movers: Gold price remains strong ahead of U.S. presidential election

• Analysts at Commerzbank predict that exchange-traded funds (ETFs) will see increased inflows due to anticipated interest rate cuts, high fiscal deficits, and elevated stock market valuations. However, they caution that investment demand in Q4 may be heavily influenced by the U.S. election outcome. Central bank gold purchases are expected to remain robust this year, but not at the levels seen in the past two years. Jewelry demand is projected to be lower than last year, although somewhat better than previously expected by the World Gold Council (WGC).
• PredictIt shows a 51% probability of Vice President Kamala Harris winning the election on Tuesday, marking her first lead over former President Donald Trump, who has a 49% chance, since October 9.
• U.S. Nonfarm Payrolls (NFP) increased by just 12,000 in October, the smallest gain since December 2020. This figure follows a revised increase of 223,000 in September (originally reported as 254,000) and fell significantly short of market expectations of 113,000.
• The Unemployment Rate remained steady at 4.1% in October, aligning with forecasts.
• Financial markets have fully accounted for a 25 bps rate cut by the Federal Reserve at its November meeting on Thursday.

Technical Analysis: Gold price maintains bullish outlook in the longer term

Gold prices are edging higher today, with a positive outlook as the price holds above the key 100-day Exponential Moving Average (EMA) on the daily chart. Additionally, the 14-day Relative Strength Index (RSI) is positioned above the midline near 60.20, indicating that support levels are likely to hold.

If gold prices continue to rise above the all-time high and the psychological zone of $2,790-$2,800, it could push XAU/USD toward $2,850.

Conversely, sustained trading below $2,715, the low from October 24, could see the yellow metal decline to $2,624, the low from September 30, followed by the psychological level of $2,600.