- Gold prices were under pressure on Monday as the US dollar and US Treasury yields rose, eroding demand for the precious metal.
- Also, easing concerns about a larger conflict in the Middle East weakened safe-haven demand for the yellow metal on Monday.
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As a result, the price of gold fell to the support level of $2,724 per ounce, but as I expected before, the increase in geopolitical tensions and concerns about the future results of the US elections will support the rise, as it rose again today, Tuesday, to the resistance level of $2,757 per ounce, which is closest to the highest prices ever. In general, according to gold trading companies’ platforms. Even with the decline in gold prices, experts believe that the upward trend is still intact for precious metals. The price of gold has risen by more than 30% since the beginning of the year.
Limited Downside in Gold
Despite the decline in gold prices at the beginning of this week, experts are confident in the yellow metal's potential to make further gains. Prices have declined slightly from a record high of $2,758.60 per ounce, which it touched earlier this month. Overall, the downside for the yellow metal may be limited amid ongoing geopolitical tensions and uncertainty surrounding the US presidential election. At the same time, central banks' buying of gold over the past two years has supported the yellow metal. Also, analysts believe that gold prices may correct somewhat to the level of $2,670-2700 per ounce in trading this week. Furthermore, this will not break the strong uptrend. Moreover, a decisive break below would make us cautious in expecting a deeper decline.
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On the US dollar front, the dollar is steady ahead of key jobs data. According to trading, the US dollar index DXY settled at around 104.3 on Tuesday after sharp volatility in the previous session, as investors turned cautious ahead of key US economic data that could shed light on the Federal Reserve’s policy path. Decisively, financial markets will be evaluating job openings and Labor turnover data on Tuesday to gauge the strength of the Labor market.
Later this week, key releases include the advance estimate of GDP growth, personal consumption expenditure inflation, and nonfarm payrolls. However, the US dollar traded near three-month highs as signs of strength in the US economy tempered expectations of an aggressive Fed rate cut. Moreover, financial markets are expecting the US central bank to deliver a more modest 25 basis point cut in November after starting its easing cycle with a massive 50 basis point cut in September. Bets on a Donald Trump victory in the US presidential election on November 5 have also lifted the dollar as his policies on tariffs, taxes and immigration are seen as inflationary.
Potential for Palladium Price Rise
Palladium has been the best-performing asset class among all precious metals last week. The price rise was driven by the US call for G7 countries to impose sanctions on Russian palladium supplies. Russia supplies about 40% of the world's palladium. Earlier this month, the price of palladium broke above its 50-day moving average and then its 200-day moving average within days of each other. In October, approaching these levels provided support for buyers, and given palladium's lower liquidity compared to gold and even silver, strong price movements cannot be ruled out. From current levels near $1,170, the next and easy target for the upside is $1,200, which was the peak at the end of last year. The 200-day moving average is at $1,700 per ounce and breaking that could push prices to higher levels. This could also mean a repeat of the explosive rise from late 2018 to March 2020.
At the time of writing, palladium futures on the New York Mercantile Exchange were around $1,200 per ounce, up 9% since the beginning of last week.
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