Gold remains close to record high amid fears of full-out war in Middle East

• Gold price attracted some haven flows on Tuesday amid rising tensions in the Middle East. 
• Reduced bets for aggressive Fed rate cuts and stronger USD capped gains for the XAU/USD. 
• Traders now look to the US ADP report for a fresh impetus ahead of the US NFP on Friday.

Gold price (XAU/USD) rallied over 1% on Tuesday and reversed its losses registered over the past two days amid escalating geopolitical tensions in the Middle East. Iran fired ballistic missiles at Israel, raising the risk of a full-blown war in the region and boosting demand for the traditional safe-haven precious metal. That said, diminishing odds for a more aggressive policy easing by the Federal Reserve (Fed) hold back bulls from placing aggressive bets around the non-yielding commodity.

Adding to this, some follow-through US Dollar (USD) buying, bolstered by data showing a resilient US labor market, further contributed to capping gains for the Gold price. Nevertheless, the XAU/USD remains within striking distance of the all-time peak touched last week and the fundamental backdrop favors bulls. Investors now look to the release of the US ADP report on private-sector employment for some impetus, though the focus remains on the Nonfarm Payrolls report on Friday. 

Daily Digest Market Movers: Gold price might attract haven flows amid persistent geopolitical risks

• Iran fired a barrage of ballistic missiles at Israel on Tuesday in retaliation to the latter’s aggression in Lebanon against the Iran-backed armed movement, Hezbollah, and helped revive demand for the safe-haven Gold price. 
• Israeli Prime Minister Benjamin Netanyahu promised that Iran would pay for its missile attack, while Iran said any retaliation would be met with vast destruction, raising the risk of a broader conflict in the Middle East.
• The Job Openings and Labor Turnover Survey (JOLTS) published by the US Bureau of Labor Statistics (BLS) showed that the number of job openings unexpectedly increased in August and stood at 8.04 million. 
• Separately, the Institute for Supply Management (ISM) reported that its Manufacturing PMI remained unchanged at 47.2 in September, pointing to a contraction in the business activity for the sixth straight month.
• Investors are still assessing the likelihood of another 50 basis points interest rate cut by the US central bank in November after the Federal Reserve Chair Jerome Powell's relatively hawkish comments on Monday. 
• Powell said that he sees two more 25 bps rate cuts this year as a baseline if the economy performs as expected, though the CME Group's FedWatch Tool indicates over a 35% chance of a supersized rate cut next month. 
• Atlanta Fed President Raphael Bostic noted on Tuesday that the US central bank should be willing to explore more outsized rate cuts if the jobs market deteriorates and the PCE data show disinflation still on track.
• Market participants now look forward to the US ADP report, which is expected to show that private-sector employers added 120K jobs in September as compared to the 99K previous, for short-term opportunities.
• The focus, however, will remain glued to the closely-watched official monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report, which should provide a fresh directional impetus. 

Technical Outlook: Gold price bulls retain control while above $2,625-2,624 resistance-turned-support

From a technical perspective, the overnight strong move-up reinforced a short-term ascending channel resistance breakpoint, turning support near the $2,625-2,624 region. The said area should now act as a key pivotal point, which if broken decisively might prompt some technical selling. The subsequent downfall could drag the Gold price below the $2,600 mark, towards the next relevant support near the $2,560 zone en route to the $2,535-2,530 region.

On the flip side, the $2,672-$2,673 area might continue to offer immediate resistance ahead of the $2,685-2,686 zone, or the all-time peak touched last week. This is closely followed by the $2,700 mark, which if conquered will be seen as a fresh trigger for bullish traders and set the stage for an extension of a well-established multi-month-old uptrend.