gold prices are showing signs of a mild rebound toward $2,750 as of early Monday, with sellers temporarily stepping back amidst a cautious market environment ahead of the upcoming US presidential election and the Federal Reserve’s policy decisions later this week.
The recent decline in gold prices from their all-time high of $2,790 is being interrupted, primarily due to a notable weakening of the US Dollar. This shift comes following the release of a recent Iowa opinion poll indicating that Democratic candidate Kamala Harris has gained an edge over Republican rival Donald Trump. As the election approaches, the race between Harris and Trump appears increasingly competitive, with voters heading to the polls on Tuesday.
Market sentiment has also been influenced by softer US Treasury bond yields, as participants brace for a potential 25 basis point interest rate reduction by the Federal Reserve on Thursday. The price of gold has experienced a downturn over the past few days, following the release of mixed Nonfarm Payroll (NFP) data, which was somewhat balanced by stronger wage growth figures. Despite the NFP numbers not significantly impacting the anticipated rate cuts by the Fed, the labor market report highlighted a jobs increase of just 12,000 for the month, alongside an unchanged unemployment rate of 4.1%.
With the pivotal US election and Fed announcement looming, market participants are closely watching for developments that could influence the US Dollar and gold prices moving forward. Analysts suggest that Trump’s economic policies could lead to higher inflation and bond yields, which would, in turn, boost the US Dollar, while a Harris victory is expected to maintain policy continuity.
On the technical side, gold has found support near the $2,730 level. A resurgence in buying interest is observed as the Relative Strength Index (RSI) slightly increases. To confirm a shift back to an upward trend, gold must close above the resistance level of $2,746, which coincides with a key Fibonacci retracement level. Conversely, a sustained drop below $2,730 may trigger further declines toward the $2,700 area, where significant support levels converge. Further bearish momentum could see prices testing the 61.8% Fibonacci support at $2,673.
