Gold holds steady amid US election woes, Fed rate cut anticipation

• Gold prices stabilize, with year-to-date gains exceeding 30% amid market turbulence.
• US Treasury yields dip; USD weakens as investors await Fed's 25 bps rate cut.
• Analysts suggest a Trump victory could boost gold further due to inflation concerns.

Gold prices remained choppy during Monday’s session as the US presidential election continued amid uncertainty about who would win the White House. Additionally, this week, the US Federal Reserve (Fed) is expected to lower rates at the November 6-7 meeting.

The XAU/USD trades at $2,736, virtually unchanged. Yields in the US 10-year benchmark note have fallen eight basis points, after hitting 4.388% last week, sitting at 4.30% at the time of writing. In the meantime, the Greenback, as measured by the US Dollar Index (DXY) performance, tumbled over 0.40%, down to 103.90.

Wall Street is focused on the outcome of the US presidential election. Opinion polls show Democratic candidate Kamala Harris and Republican Donald Trump in a technical tie. A Reuters poll showed concerns that the US could face a similar election crisis post-Trump’s 2020 election defeat.

By Thursday, the Federal Reserve is expected to lower borrowing costs by 25 basis points to the 4.50%-4.75% range. October’s US economic data revealed that the US jobs market remains solid, lowering the odds of the US hitting a recession.

Analysts at TD Securities said “If Trump wins, I think, Gold does well here. We're probably worried a little bit more about inflation with all the tariffs that he's talking about.” Bullion is a hedge in tough and uncertain economic and political times.

The golden metal has enjoyed a rally of over 30% in 2024, and has recorded all-time highs, which sits at $2,790 at the time of writing.

Daily Digest Market Movers: Gold price consolidates amid US Presidential election

• The US Census Bureau reported that US factory orders in September contracted by -0.5%, slightly more than the expected -0.4%, but there was an improvement over August's -0.8% decline.
• Last week’s rising US inflation and dismal jobs report raised the chances of the Federal Reserve reducing rates in 0.25% chunk sizes.
• The Federal Open Market Committee (FOMC) is anticipated to cut rates by 25 bps at its November 7 meeting.
• Data from the Chicago Board of Trade, based on the December fed funds rate futures contract, indicates that investors are pricing in 50 basis points (bps) of Fed easing by the end of the year.

XAU/USD Technical Outlook: Gold price retreats below $2,750 as bulls take a breather

Gold prices remain consolidated. The XAU/USD fluctuated between $2,730 and $2,748 during the trading day, with no catalyst for moving it outside of those boundaries.

Momentum remains bullish, as depicted by the Relative Strength Index (RSI), though buyers seem to have lost a step as the RSI edges lower in bullish territory.

Gold buyers need to reclaim the psychological $2,750 figure for a bullish continuation. Once cleared, the next stop would be the record high at $2,790. Conversely, if XAU/USD registers a daily close below $2,750, further weakness lies ahead.

The first support would be the October 23 low at $2,708. Once surpassed, the next stop would be $2,700, followed by the September 26 swing high, which turned support at $2,685, and by the 50-day Simple Moving Average (SMA) at $2,628.