Gold Nears $2,750 Amid Election Uncertainty and Fed Rate Decision This Week

Gold prices rose in Asian trading on Monday, hovering close to recent record highs as investors sought safe-haven assets amid election uncertainty and an upcoming Federal Reserve rate decision.

The U.S. presidential race between Donald Trump and Kamala Harris remains close, with polling focused on key battleground states. Harris has strong support among female voters, while Trump’s base includes a younger demographic of white male voters.

With the election outcome uncertain, investors are looking to gold as a shield against potential market volatility.

Adding to gold’s momentum is the recent weakness in the U.S. dollar, which fell following softer-than-expected nonfarm payroll data last week.

This decline in the dollar bolstered gold’s appeal, as the lower dollar reduces the cost of holding non-yielding assets like gold.

The Federal Reserve is anticipated to cut interest rates by 25 basis points this week, which could further support gold by reducing the opportunity cost of investing in non-yielding assets.

Dollar Weakness and Fed Rate Cut Prospects Drive Gold Demand

Gold prices have been bolstered by a cooling U.S. job market, which gives the Federal Reserve more reason to ease monetary policy.

Last week’s payroll report showed only a 12,000 increase in jobs for October, marking the smallest gain since December 2020 and falling well short of market expectations of 113,000.

This, combined with downward revisions for the previous two months, points to a slowing labor market. The unemployment rate, however, remained steady at 4.1%, aligning with forecasts.

The soft payroll data has added to the case for a rate cut, with financial markets now fully pricing in a 25 basis-point reduction in the Fed’s policy rate during its Thursday meeting.

Lower interest rates tend to benefit gold, as they reduce the yield gap between gold and interest-bearing assets, making gold a more attractive option for investors looking for stability amid economic uncertainty.

Key Market Factors Influencing Gold:

• Slowing job growth in the U.S. indicates a cooling economy.
• Fed is expected to cut rates, with implications for the dollar and gold.
• Safe-haven demand surges due to election uncertainty and economic headwinds.

Gold Price Forecast: Technical Levels to Watch

Currently trading around $2,741, gold is testing resistance at the 50-day Exponential Moving Average (EMA) of $2,749.36. Should gold break above this level, further resistance lies at $2,753.30 and $2,762.10.

A sustained move above these levels could signal a continuation toward $2,772.38, reinforcing a bullish outlook. However, failure to clear these barriers may bring support levels at $2,725 and $2,717 into focus, potentially leading to bearish momentum.

The Relative Strength Index (RSI) is at 39.07, gradually recovering from oversold levels, suggesting a potential buildup in buying interest. Traders should keep an eye on the trendline support around $2,734.51 and the 50-day EMA as crucial indicators for any directional shifts in gold’s price.

With the Fed decision and election results on the horizon, gold’s role as a safe haven could further solidify, drawing continued interest from investors seeking shelter from economic uncertainties.