Geopolitical risks and election jitters sent gold prices soaring to a record high of $2,720. The precious metal’s appeal as a safe-haven asset was amplified by the declining US dollar and falling Treasury yields. Market experts anticipate that gold prices could reach $3,000 an ounce within the next six to twelve months.
Gold prices continued their record-breaking ascent, surpassing the $2,700 mark as uncertainty surrounding the US election and Middle East tensions fueled demand for safe-haven assets. The escalating tensions weighed on US Treasury bond yields and the US dollar, which retreated to a two-day low of 103.45 after reaching a two-month peak of 103.87. At the time of writing, the XAU/USD pair was trading at $2,721, up by 1.09%.
The market sentiment remained positive as Wall Street registered modest gains. Meanwhile, geopolitical developments dominated the headlines after Israel confirmed the death of Hamas leader Yahya Sinwar. Hezbollah announced its intention to escalate its confrontation with Israel, while US Defense Secretary Austin suggested that the death of the Hamas leader could present an opportunity for a ceasefire.
According to Kann News, U.S. Secretary of State Antony Blinken informed Israeli President Isaac Herzog that he is expected to visit in the coming days to discuss a potential ceasefire agreement.
Meanwhile, gold prices continued their upward momentum after Hezbollah issued a warning to intensify the conflict. The XAU/USD pair surged beyond $2,700, hitting a record high of $2,720.
Alexander Zumpfe, a metals trader at Heraeus Metals in Germany, noted that geopolitical tensions aren’t the only factors driving the rally. “Concerns surrounding the U.S. presidential election and expectations of more accommodative monetary policies have further boosted the surge,” he explained.
Central banks around the world are anticipated to maintain a trend of easing monetary policy. This week, inflation in the UK for September came in at 1.7% year-over-year, below the Bank of England’s (BoE) target of 2%, prompting speculation of a potential BoE rate cut. Similarly, the European Central Bank (ECB) lowered interest rates after inflation fell to 1.7%, below its goal.
As a result, global bond yields declined, providing a favorable environment for non-yielding assets like gold. The yield on the U.S. 10-year Treasury note dropped by two basis points during the day, standing at 4.073%, after peaking at 4.142% earlier in the week.
Gold has reached several all-time highs this year and has risen by 30% year-to-date. Max Layton, Citi’s Global Head of Commodities Research, predicts that gold could climb to $3,000 per ounce within the next six to twelve months.
Despite these bullish trends, the Federal Reserve is widely expected to lower interest rates by 25 basis points at its upcoming November meeting, with the odds of a rate cut sitting at 92.9%, according to CME’s FedWatch Tool.
Technical Overview on the Gold (XAU/USD) market
The bullish momentum in gold prices continues unabated. The Relative Strength Index (RSI) surged to overbought levels, indicating strong upward pressure, without any signs of a potential reversal.
Although the Relative Strength Index (RSI) is approaching overbought territory, the marubozu bullish candle that closed the week, with the price holding strong above the $2,700 level, suggests that there may still be room for further bullish momentum in the market. Given the current conditions, gold prices are expected to maintain their upward trajectory. The first major resistance level is at $2,750, followed by $2,800.
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