GOLD Analysis
Afternoon: Gold Hits Record Highs Amid Central Bank Rate Cut Expectations and Geopolitical Tensions
Highlights:
- Gold surged to a record $2,680 amid central bank rate cut expectations and falling bond yields.
- Fed, ECB, and BoE rate cuts are anticipated, boosting non-yielding assets like gold.
- Geopolitical tensions in the Middle East and US election uncertainty further fueled safe-haven demand.
Overview:
Gold prices surged to around $2,680, reaching an all-time high as dovish sentiment from major central banks and slightly declining bond yields spurred demand for non-yielding bullion. The Federal Reserve is now widely expected to cut rates by 25 basis points in November, with another cut likely before the end of the year. Meanwhile, the European Central Bank (ECB) is anticipated to announce another rate cut on Thursday, reflecting a broader trend among global central banks, including several major Asian ones, which have also reduced rates in recent months. The Bank of England (BoE) could follow suit next month, as inflation in the UK continues to drop.
Gold’s allure as a safe-haven asset has been bolstered by political uncertainty ahead of the US presidential election, as well as renewed tensions in the Middle East. On Wednesday, Israel escalated air strikes on Lebanon, adding further risk to the geopolitical landscape. The confluence of economic and political factors continues to make gold an attractive option for investors seeking to hedge against volatility.
Key Economic Data
Upcoming data includes Euro Zone Final Core CPI y/y, ECB Monetary Policy decision, and US Core Retail Sales and Unemployment Claims. These reports are likely to shape the market’s expectations for future rate cuts and gold prices.
Technical Outlook
- Support levels: Gold finds support around $2,660, with MCX prices supported at ₹76,200.
- Resistance levels: Gold could face resistance near $2,700, with MCX resistance at ₹77,100.
Trading Strategy
- Action: Buy on a dip near $2,675, with a target of $2,696 and a stop loss below $2,662.
Gold’s upward trend appears firmly supported by central bank policies and geopolitical risk. Investors will continue to monitor upcoming economic data and developments in global tensions for further market direction.
Support and Resistance Levels:
