gold prices are currently holding steady below the $2,750 level as the highly anticipated 2024 US presidential election unfolds. A significant rebound in the US Dollar has occurred, fueled by emerging reports showing a likely Republican victory led by Donald Trump in exit polls across numerous states. Trump’s campaign appears to be gaining traction, claiming 14 states, while the Democratic nominee, Kamala Harris, has secured four states along with Washington, D.C.
Despite the early leads reported, it is important to note that final results are pending, and the race remains competitive, particularly in swing states where the margin is narrow. Nevertheless, the positive sentiment surrounding a potential Trump victory is bolstering investor confidence in the US Dollar, leading many to shift away from gold and diminishing its appeal as a non-yielding asset. Concurrently, US Treasury bond yields have surged, with the 10-year yield hitting its highest level since early July.
The market’s expectations regarding Trump’s economic policies are contributing to the bullish outlook for the US Dollar. Investors anticipate that his stance on issues such as immigration, tax incentives, and tariffs may lead to inflationary pressures, further strengthening the Dollar and Treasury yields. Consequently, while gold may experience long-term benefits if market disruptions occur, it is facing downward pressure in the short term as election outcomes remain uncertain.
In terms of technical analysis, gold is struggling to maintain its position around the $2,730 level, with recent trading suggesting increased resistance from sellers. The 14-day Relative Strength Index (RSI) has begun to decline, yet it stays above the critical 50 level, which can indicate potential buying opportunities. A recovery above the $2,746 resistance level could signal a resurgence in upward momentum, targeting the all-time high of $2,790. Alternatively, failing to maintain support at $2,730 may lead to further declines towards significant Fibonacci retracement levels in the lower $2,700s.
