Gold Price Forecast: $2,800 Target in Sight Amid Geopolitical and U.S. Election Uncertainty

Gold is back up, driven by Middle East tensions and US election uncertainty. On Tuesday spot rose 0.4% to $2,729.91 as investors are positioning ahead of the election and looking for safe-haven assets to hedge against volatility.

IG market strategist Yeap Jun Rong says, “There are still many tailwinds for gold, including being a hedge against US election uncertainty and geopolitical risks.” Central banks and ETF buying are also supporting prices. With only weeks to go until the election, political risks will continue to drive safe-haven flows into gold.

Geopolitical events, especially the Middle East conflict, have also supported gold. Israel’s operations against Hezbollah in Lebanon and Hamas in Gaza have added to the tensions in the region.

As investors assess these risks, the prospect of the Fed cutting rates in November has also sparked gold gains. According to the CME FedWatch tool, traders now see a 91% chance of a quarter-point cut, which means looser monetary policy.

Gold has hit $2,747.70 a Troy ounce, driven by the Middle East war, uncertainty over the U.S. election, and rate cuts, as investors seek safe-haven assets amid global instability. pic.twitter.com/KRMlPQW4Pj

— D.A. Market Online Trading (@itradeph) October 21, 2024

Political and Economic Risks Keep Gold Bulls Happy

Despite the strong US dollar and rising bond yields, gold is still attracting buyers. The 10-year Treasury yield hit a 12-week high and the US dollar is near a two-and-a-half month high. Normally these would be negative for gold but the political and economic risks are trumping the usual market dynamics.

Gold is holding up well against a stronger dollar, which shows its unique appeal as a hedge during times of political and financial uncertainty. Yeap Jun Rong says buyers may target the next psychological level of $2,800 as the market prepares for more political uncertainty. “US election and geopolitical risks will continue to be the key drivers of gold in the short term,” he added.

Going forward, many expect central bank buying and investor flows into ETFs to support gold prices. The continued interest in gold is because it’s a diversification asset that can hedge against both inflation and deflation.

⚠️BREAKING: The price of gold has surged to the highest point in history.

It’s caused by uncertainty about conflict in the Middle East and the U.S. presidential election as investors are in search of a safe haven. This also makes the fight against galamsey harder. pic.twitter.com/82E7ZFYkaX

— CediRates (@CediRates) October 21, 2024

Technical Outlook: Gold (XAU/USD) – October 22, 2024

Gold is in an uptrend channel and above $2,725, a level that has been a buy zone for many times. The recent “three white soldiers” candlestick pattern is also a bullish reversal signal, so more upside is expected.

The pivot is at $2,716.64, a key support level for the day. Immediate resistance is at $2,739.35, then $2,753.43 and $2,769.30. On the downside, immediate support is at $2,716.64, then $2,704.43 and $2,688.15 if it corrects further.

Technical Indicators:

• RSI: 66.55, near overbought but has room to go up.
• 50 EMA (50-Day Exponential Moving Average): At $2,704.43, the 50 EMA is supporting the uptrend and acting as dynamic support.

Summary: Gold is up, in an uptrend channel and above $2,725. Three white soldiers, so more upside to $2,753.