- Gold prices breached the $2800 per ounce barrier on Wednesday, hitting a new all-time high as uncertainty surrounding the US elections and geopolitical tensions fuelled demand for the safe-haven asset.
- At the time of writing, the most active December gold contract was trading at $2799.70 per ounce, up 0.7% from the previous close.
- The contract had earlier hit a new all-time high of $2801.65 per ounce.
Meanwhile, US Treasury yields fell, boosting demand for non-yielding commodities such as gold and silver. According to gold trading platforms, the rise in gold prices comes ahead of next week’s US presidential election and the Federal Reserve’s policy meeting. Furthermore, gold bulls remained resilient in the face of expectations that bets on interest rate cuts by the Fed will decline.
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The US central bank cut interest rates by 50 basis points in September, fuelling expectations of a similar cut in November. However, hotter-than-expected inflation and a resilient US Labor market have since reduced bets on a similar rate cut. According to the CME FedWatch tool, traders are pricing in a 98.9% chance of the Fed cutting rates by 25 basis points at its meeting next week.
Uncertainty Surrounding US Elections
The increased uncertainty surrounding the outcome of next week's US elections has bolstered demand for the safe-haven gold. Polls and analysts expect a close contest between former President Donald Trump and Vice President Kamala Harris. The candidates have outlined different plans for the US economy, which has increased uncertainty about the political scenario in the United States. Investors will be closely monitoring the election results next week as they could shape US policy for the next four years.
Geopolitical Tensions Escalate
Reports on Tuesday highlighted casualties from an airstrike, following recent military actions in the region. These developments have heightened tensions in the Middle East, with analysts noting increased geopolitical risks. This has contributed to the bullish sentiment for the safe-haven XAU/USD pair, despite the strength in US Treasury yields and the US dollar.
Economic Data in Focus
Investors will focus on the release of US third-quarter GDP data on Thursday. Also, the jobless claims report will be released on Thursday, which will provide further signals on the health of the US economy. In addition, the US personal consumption expenditure index will be released on Friday. The data is the Federal Reserve's preferred measure of inflation. US non-farm payrolls data is also scheduled to be released on Friday. If the data points to a resilient US economy, the Federal Reserve may stick to smaller US interest rate cuts in its upcoming meetings. However, any rate cuts bode well for gold as it is a non-yielding asset.
Gold Price Analysis and forecast Today:
According to gold analysts today, the overall trend for the gold price will remain bullish and there is a strong chance of testing the historical psychological level of $2800 per ounce. There could be more to come if the factors driving gold gains persist, including increasing global geopolitical tensions and the abandonment of tightening by global central banks. Investors are not as concerned about technical indicators moving towards oversold levels as they are about monitoring the continued factors driving gold gains. Ultimately, no significant profit-taking will occur without a resolution to global tensions.
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