GOLD Price Analysis – Oct 31, 2024
Daily Price Outlook
Gold prices (XAU/USD) are experiencing slight pressure around the $2,780 mark in early European trading. This is primarily due to rising US Treasury bond yields. Additionally, there are growing expectations that the Federal Reserve may not ease interest rates as aggressively, further weighing on gold prices.
However, the decline appears limited as uncertainties surrounding the upcoming US presidential election and ongoing tensions in the Middle East continue to bolster gold's appeal as a safe haven.
Moreover, the softer tone in global stock markets is giving a slight boost to gold as cautious investors lean toward safe assets. Many traders seem to be waiting on the sidelines ahead of key US data releases, like the Personal Consumption Expenditure (PCE) Price Index and Friday’s Nonfarm Payrolls (NFP) report.
These reports are expected to offer clues about the Fed's next moves on interest rates, which could provide fresh direction for XAU/USD.
Impact of Rising Treasury Yields and Strong Economic Data on Gold Prices
On the US front, the broad-based US dollar remains bullish, fueled by a further rise in US Treasury bond yields. This uptick is partly driven by expectations that the Federal Reserve may ease interest rates less aggressively, adding downward pressure on gold prices.
However, the latest report from Automatic Data Processing (ADP) on Wednesday showed that private sector employers added 233,000 jobs in October, up from a revised 159,000 in September and beating forecasts.
This points to a strong job market, and together with other positive US economic data, it reinforces the view that the Fed may hold off on cutting rates quickly.
The US Bureau of Economic Analysis also reported that the economy grew at an annualized rate of 2.8% in the third quarter, slower than the 3% growth seen from April to June. The markets are currently expecting a 25 basis points interest rate cut from the Fed in November.
However, concerns about government spending after the US elections are pushing bond yields higher, with the 10-year US government bond yield hovering just below 4.3%, close to its highest level since July. This increase in yields boosts demand for the US Dollar, which is a bearish for gold prices.
Therefore, the rise in US Treasury bond yields and strong economic data are creating downward pressure on gold prices, as higher yields increase demand for the US Dollar, making gold less attractive. This trend may continue with upcoming economic data releases.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is currently trading at $2,784.29, down 0.11% on the day, as it hovers near a critical pivot point at $2,789.81. The precious metal is testing support levels after encountering strong resistance at $2,798.12, a zone that remains a significant barrier to any immediate upside.
Technical indicators suggest a cautious sentiment, with the Relative Strength Index (RSI) sitting at 69—just below overbought territory, signaling potential consolidation or mild correction if buying pressure weakens.
Above the pivot, gold faces resistance at $2,805.15 and $2,812.45. A breakout above these levels could renew bullish momentum, pushing prices higher if market conditions support risk-off sentiment. However, the presence of the 50-day Exponential Moving Average (EMA) at $2,745 indicates a strong underlying support level, likely to provide a floor for any downward movement.
On the downside, immediate support rests at $2,779.33, followed by more robust levels at $2,773.08 and $2,767.84. A sustained break below these supports could open the door to further declines, targeting the 50 EMA around $2,745, which could serve as a pivotal level for any significant trend shifts.
The current setup suggests a potential selling opportunity if gold fails to hold above $2,789, with a target at $2,773. However, caution is advised, as a recovery above $2,798 would invalidate this outlook and hint at renewed bullish momentum.
This balanced technical landscape calls for close monitoring of the $2,789 pivot, which will likely shape gold's short-term trajectory.
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