GOLD Analysis
Afternoon: Gold Prices Surge Amid Geopolitical Tensions and US Election Uncertainty
Highlights:
- Gold surges over 33% this year amid Middle East tensions and US election uncertainty.
- 91.5% chance of a 25 basis-point rate cut by the US Federal Reserve in November.
- Technical outlook: Support at $2718 and resistance at $2760 for gold prices.
Overview:
Gold prices have reached new highs, driven by rising geopolitical tensions in the Middle East and growing uncertainty about the upcoming US presidential election. As a safe-haven asset, gold is highly sought after in times of political and economic instability. The precious metal has soared more than 33% this year, consistently setting new records as global risks intensify.
Geopolitical concerns, particularly escalating conflicts in the Middle East, have significantly boosted demand for gold. Investors view gold as a hedge against the uncertainty surrounding the region, particularly with Israel's continued airstrikes and the potential for wider conflict. Meanwhile, the uncertainty surrounding the US election outcome adds to the safe-haven demand for bullion.
In addition to geopolitical risks, market expectations around the US Federal Reserve's monetary policy are contributing to gold's rise. According to the CME's FedWatch tool, there is a 91.5% chance of a 25 basis-point rate cut by the Federal Reserve on November 7. This further supports the case for gold, as lower interest rates typically weaken the dollar and reduce bond yields, enhancing the appeal of non-yielding assets like gold.
Technical Analysis
- Support: Gold prices are expected to find support at $2718 and ₹78,200 on MCX.
- Resistance: Prices may face resistance at $2760 and ₹79,000 on MCX.
Market Outlook
The International Monetary Fund (IMF) continues to predict robust growth for the US economy, which is expected to remain a key driver of global growth through the end of this year and into 2025. However, this forecast may be affected by geopolitical developments and the trajectory of US monetary policy.
Trading Strategy
- Action: Buy on dips around $2734, targeting $2755 with a stop loss below $2722.
- For MCX, buy near ₹78,200, targeting ₹79,000, and implement a stop loss below ₹77,500.
Gold’s continued rise remains supported by global risk factors, but short-term volatility is likely due to upcoming US economic data releases, including Consumer Confidence, Existing Home Sales, and Crude Oil Inventories, as well as ECB President Lagarde's speech from the Eurozone. Investors are advised to keep a close eye on these developments as they may impact gold’s near-term price movements.
Support and Resistance Levels:
