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At the beginning of this week, the price of Gold rose to around $2740 per ounce, setting new record levels, driven by increased demand for safe-haven assets. Investors are closely monitoring developments in the Middle East as tensions escalate. Uncertainty surrounding the upcoming US presidential election is also increasing the attractiveness of safe-haven assets. Additionally, expectations of more accommodative monetary policies from major central banks are also supporting gold prices.
In this regard, the People's
bank of China has cut key interest rates as part of its stimulus measures, and the European Central Bank cut interest rates last week for the third time this year. However, recent strong US economic data has fuelled expectations of a less pessimistic stance from the Federal Reserve.
According to Forex market trading, the US dollar stabilizes after a three-week rally. The US dollar index DXY held steady at around 103.4 on Monday after rising for three straight weeks, supported by expectations of a more modest easing cycle from the Federal Reserve and rising prospects for a Trump presidency. Last week's strong US retail sales figures, along with strong jobs and inflation reports earlier this month, pointed to resilient consumer spending and suggested the US economy is still far from recession. Financial markets now see around a 91% chance that the Fed will cut US interest rates by a more moderate 25 basis points in November, with a possible skip in December.
On the political front, the growing chances of former President Donald Trump regaining the White House in November supported the US dollar as his protectionist and tax-cut policies are considered inflationary, which could keep US interest rates high. Investors are now looking at US Purchasing Managers' Index releases and other economic data this week, as well as corporate earnings reports to gauge the strength of the economy.
According to stock trading platforms, US stock indices closed mostly lower amid rising yields. Most US stocks declined on Monday after their longest weekly rally this year, as investors prepared for another busy earnings week while Treasury yields rose further, pushing consumer and homebuilder stocks lower. The S&P 500 index fell 0.2%, the Dow Jones lost 344 points, while the Nasdaq 100 rose 0.2%.
Meanwhile, Treasury yields rose, with the 10-year note hitting 4.18%, stoking concerns about more inflation and fiscal spending pressures. Homebuilders and large companies were lower, though Nvidia rose 4.1% to a record high. Construction companies FirstSource (-5.2%) and Lennar (-4.3%) saw big declines. Concurrently, Tesla (-0.8%) kept the market afloat ahead of its upcoming earnings report, despite disappointment over its recent robotics reveal. Boeing shares rose 3.1% after news of a temporary union agreement. Big earnings reports are expected this week from companies such as Tesla, Coca-Cola and General Electric Aerospace. So far, 79% of companies that have reported Q3 results have exceeded expectations.
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According to gold analysts. Gold is coming off a 3% weekly gain, adding to its 33% year-over-year rise. As we mentioned before, the continued global geopolitical tensions, the global central banks' reluctance to tighten policy. Also, the concerns over the outcome of the US elections next month will continue to be catalysts for more bullish control over gold, regardless of the technical indicators moving towards strong overbought levels. Currently, the closest resistance levels for gold are $2,742, $2,760 and $2,800 per ounce, respectively. Considering that the aforementioned gains will stop, strong profit-taking will be carried out, the timing of which is not yet known, which confirms the continuation of the upward trend.
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