Gold price hits record high on US election uncertainty, geopolitical risks

Key points:

1. Gold prices are reaching new all-time highs amid concerns over the US election and tensions in the Middle East.
2. This upward momentum persists despite rising US Treasury bond yields and a strong dollar.
3. Traders are now awaiting key US economic data to inform their strategies for potential further gains.

Gold price (XAU/USD) reached a new record high during the Asian session on Wednesday, driven by uncertainties related to the US presidential election and the conflict in the Middle East, which have increased demand for safe-haven assets. Additionally, a modest pullback in US Treasury bond yields and a subdued US dollar have further supported the precious metal. These factors largely outweigh a generally positive market sentiment that could typically pressure gold prices.

Despite expectations for smaller interest rate cuts by the Federal Reserve and rising Treasury yields, the bullish sentiment around gold remains strong. However, it remains to be seen if this momentum can continue, especially given slightly overbought conditions on the daily chart and the anticipation of key US economic data. This upcoming data could offer insights into the Fed's rate outlook and influence the next directional movement for XAU/USD.

US election and Middle east tension pushed gold price to new high

Gold prices are gaining from the political uncertainty in the US and ongoing tensions in the Middle East. The tight race for the White House between former President Donald Trump and Vice President Kamala Harris has intensified this uncertainty, pushing gold to a new record high on Wednesday.

Recent events, such as an Israeli strike in northern Gaza that killed nearly 100 people, heighten the risk of further escalation in the region, bolstering demand for safe-haven assets like gold. This demand is helping to offset the impact of rising US Treasury bond yields and a strengthening US dollar.

US economy remains robust

Meanwhile, US economic data indicates that the economy remains robust, reinforcing expectations for a less aggressive easing policy by the Federal Reserve. The Conference Board's report revealed that the Consumer Confidence Index reached a nine-month high of 108.7 in October, reflecting optimism despite a disappointing Job Openings and Labor Turnover Survey.

Concerns over deficit spending following the November 5 presidential election continue to keep US bond yields elevated, yet this does not significantly hinder gold's upward movement. Traders are now focused on upcoming US economic reports, including the ADP private-sector employment report and the Advance GDP print, which is expected to show a 3% annualized growth rate for Q3. Attention will also turn to the PCE Price Index and the Nonfarm Payrolls report later in the week.

Technical Outlook:

Gold is currently testing a multi-month ascending trend-line resistance near the $2,780-2,785 range, which could act as a significant barrier due to a slightly overbought Relative Strength Index (RSI). If gold can sustain strength above this level, it may rise towards the $2,800 mark.

Conversely, if there is a notable pullback, support is expected around the $2,750 level. Further selling pressure could lead to declines towards $2,732-2,730, and potentially down to $2,715. Breaking this level could pave the way for a drop towards the next key support around $2,675, and further towards $2,657-2,655.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.