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Gold Price Forecast: U.S. Election Uncertainty and Fed Rate Decision Fuel $2,736 Surge

Gold prices have climbed to approximately $2,736 as markets brace for the outcome of a highly contested U.S. presidential election. Opinion polls depict a tight race between Democratic candidate Kamala Harris and Republican Donald Trump.

The heightened uncertainty has driven investors toward safe-haven assets like gold, as concerns mount over the possibility of a disputed result and political unrest.

A recent Reuters/Ipsos poll highlighted fears of civil unrest similar to that following Trump’s 2020 loss, when allegations of fraud led to a violent Capitol breach.

Gold is performing well in anticipation of inflationary pressures that may accompany a Trump win, especially given his pro-tariff stance,” said Bart Melek, head of commodity strategies at TD Securities.

Analysts agree that gold’s appeal as a hedge against political and economic turbulence remains strong, particularly when inflation risks are on the rise.

Federal Reserve’s Upcoming Rate Decision

Adding to the momentum behind gold, the Federal Reserve’s upcoming interest rate decision on Thursday has captured market attention. Investors widely expect a quarter-point rate cut, a move that would make holding non-yielding assets like gold more attractive. Gold typically thrives in low-interest environments as the opportunity cost of holding it decreases.

According to UBS analyst Giovanni Staunovo, “While the election may set the tone, the Fed’s rate cut decision will play a critical role in shaping gold’s trajectory.

However, the cut itself may not cause significant price shifts if the Fed signals more gradual reductions in the future.” Staunovo’s sentiment reflects broader market expectations that the Fed will align future cuts with market forecasts, avoiding any surprises.

Technical Analysis: Key Levels to Watch

Gold’s technical landscape also supports a potential bullish trend. Currently trading around $2,736, the price has formed a hammer candlestick on the 2-hour chart, a bullish signal typically indicating possible upward momentum.

Immediate resistance lies at $2,747, near the 50-day Exponential Moving Average (EMA), which could prove a key barrier to further gains.

GOLD Price Chart - Source: Tradingview
  • Resistance Levels: Immediate at $2,747 (50-day EMA), followed by $2,757 and $2,769.

  • Support Levels: Initial support at $2,727, with additional support at $2,717 and $2,708.

  • Technical Indicators: RSI near 40, suggesting a neutral trend with a slight bullish tilt.

A decisive move above $2,747 could prompt bullish momentum, potentially pushing gold toward the $2,757 and $2,769 levels. Conversely, failure to maintain support at $2,727 could invite selling pressure, with a focus on lower support levels.

The RSI at 40 reflects neutral sentiment, but a break above resistance could attract renewed buying interest, particularly amid political and economic uncertainties.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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