- Gold hit a new record high on Wednesday as tensions in the Middle East escalated.
- Market participants are uncertain about the upcoming US presidential election.
- Business activity in the US increased in October.
The outlook for gold suggests a slight shift in sentiment as prices pull back from recent record highs. The drop came after US data showed continued resilience in the previous session, dampening Fed rate cut expectations. Nonetheless, gold is heading for its third week of gains amid assured inflows.
–Are you interested in learning more about Australian forex brokers? Check out our detailed guide-
Gold hit a new record high on Wednesday as escalating Middle East tensions sent investors scrambling for safety. The conflict between Israel and Hezbollah escalated with the exchange of two missiles, dashing hopes for an imminent ceasefire. Furthermore, Israel struck Gaza, killing 17 people.
Elsewhere, market participants are worried about the upcoming US presidential election. The tight race between Trump and Kamala has created uncertainty about the outcome. As a result, most traders prefer to stay on the sidelines or buy safer assets like gold.
By Thursday, however, prices eased as US data revealed a strong economy, easing pressure on the Fed to cut borrowing costs. The first report showed jobless claims fell to 227,000 last week, while economists had forecast 243,000 claims. The decline pointed to difficult conditions in the labor market.
A separate report found that business activity in the US increased in October. Notably, the S&P 500 Global Composite PMI rose from 54.0 to 54.3, indicating solid demand. The US economy has performed better than expected in recent weeks, changing the outlook for a Fed rate cut. Market participants see an increasing chance that the Fed will cut just one more time this year, heavy on gold.
Gold key events today
Traders are not expecting high-impact economic reports from the US. Therefore, it is likely to follow the Middle East war and the upcoming US elections.
Gold Price Technical Outlook: Bullish Momentum at the Crossroads
From the technical side, gold has declined from recent highs and is challenging support from the 30-SMA. The bullish trend was strong until it approached the 2760.33 level. Here the bears made large candles, leading to a retest of the 30-SMA. Moreover, the decline followed a bearish RSI divergence, revealing the weakness of the uptrend.
If you are interested in guaranteed stop loss forex brokers, check out our detailed guide-
If the bears break the SMA, gold could revisit the 2720.46 support near the 0.5 Fib level. Otherwise, the uptrend will continue with a new high above 2760.33.
Do you want to trade Forex now? Invest in eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money.
