Gold holds firm near record high, boosted by tensions in Middle East, US elections

• Gold remains elevated amid renewed Middle East hostilities.
• US election uncertainty adds to gold’s appeal, with polls showing a tight race between Trump and Biden in key swing states.
• Rising US Treasury yields and a rebounding Dollar cap gains, with DXY up 0.29% and limiting further upside for the yellow metal.

Gold price remains firm ahead of the weekend late in the North American session, up 0.18% after hitting a record high on Wednesday at $2,758. Elevated tensions in the Middle East and uncertainty around US elections keep traders flocking to the safe-haven metal. The XAU/USD trades at $2,740 at the time of writing.

Geopolitics pushed aside US economic data as the main driver for price action. Hostilities continued Friday between Israel and Hezbollah at around the border of Israel and Lebanon. Israeli officials said that around 45 missiles were launched by the terrorist organization.

Meanwhile, Israel attacked eastern Lebanon, leading to the closure of the Al-Qaa and the Masnaa border crossings via Lebanese officials and the United Nations. Israel stated they targeted Hezbollah’s infrastructure.

According to CNN, the US Secretary of State Anthony Blinken met with Middle East leaders in London, trying to end the war in Gaza.

Aside from this, traders are also eyeing US elections. Deutsche Bank Analyst Jim Reid wrote, “An Emerson poll of several swing states yesterday had Trump very marginally ahead, including a 1pt lead in Pennsylvania and Wisconsin, and a 2pt lead in North Carolina. But given the margin of error is just over three points for those polls, this remains a very tight race, as reflected in various prediction markets and forecast models.”

Recently, US Treasury yields recovered after diving to daily lows and turned positive, capping Bullion prices. Also, Greenback is staging a recovery as the US Dollar Index (DXY), which tracks the Dollar's value against a basket of six currencies, is up 0.29% at 104.32.

Data-wise, the US economic docket revealed that US Durable Goods Orders dropped in September. At the same time, the University of Michigan (UoM) revealed that Consumer Sentiment amongst Americans improved in October.

Daily digest market movers: Gold price remains firm despite higher US yields

• The US 10-year Treasury note yield rises two basis points to 4.23%.
• US Durable Goods Orders in September fell by 0.8% month-over-month (MoM), which was better than the estimated -1% decline and unchanged from the previous month.
• US Consumer Sentiment in October came in better than expected, rising to 70.5, compared to the forecast of 69.
• The same survey revealed that inflation expectations for one year dropped from 2.9% to 2.7%, while expectations for five years remained unchanged at 3%.
• Data from the Chicago Board of Trade, based on the December fed funds rate futures contract, indicates that investors estimate 49 basis points (bps) of Fed easing by the end of the year.

XAU/USD technical outlook: Gold price rises above $2,740

Gold price remains upward biased, though it has consolidated at around $2,708-$2,758 during the last four days, unable to crack the bottom-top of the range.

Momentum indicators suggest that buyers are gaining strength, with the Relative Strength Index (RSI) reversing its decline and moving upwards in bullish territory.

If XAU/USD clears $2,750, the next resistance level will be the year-to-date (YTD) high at $2,758. Once surpassed, the next target would be $2,800.

On the downside, if bullion prices fall below the October 23 low of $2,708, the next support lies at the 38.2% Fibonacci Retracement level at $2,699, followed by the 50% and 61.8% Fibonacci Retracement levels at $2,681 and $2,662, respectively.