Gold Price Rises to New All-Time-Highs, And There’s Still Incentive to Buy More of It

Summary:
• Gold price rose past the $2,760 mark on Tuesday extending its streak to four successive daily gains, but that isn't the end of it.

Gold price hit new all-time highs on Tuesday as investors fixed their eyes on US macroeconomic data for hints on the probable Fed interest rate direction. The yellow metal traded at $2,764 per ounce at the time of writing, six dollars above the previous all-time high price set last week. The metal also has strong safe haven demand, which could ultimately break through the ATH.

US elections, Fed interest rates key gold price drivers

The CME FedWatch Tool indicates that an overwhelming majority of traders (96.3%) expect the Fed to reduce interest rates by 25 basis points when it makes the announcement on November 7. That more than double the 46.7 percent of traders who expected the same figure a month ago. With a smaller cut on the borrowing cost, the dollar is expected to strengthen, which should typically exert downward pressure on gold prices.

However, investors are also concerned about the broader US economy, especially in view of the presidential elections. A Donald Trump win could usher a significant change in the US economic policies, with tarriffs and greater liberalisation potentially causing initial instability in the markets. That could trigger increased demand for gold in the coming weeks.

Meanwhile, yields on benchmark 10-year US government bonds were up by 5.3 basis points to 4.326, exerting downward pressure on non-yielding gold. Also, safe haven demand is likely to decline as the Middle East tension seems to have cooled down.

However, gold could rise further in Tueday’s trading after the US JOLTS jobs openings data came out lower-than-expected. The JOLTS figures printed out at 7.443 million, substantially below the consensus forecast 7.980 million. Meanwhile, the August reading was revised downwards to 7.861 million from 8.040. That could neutralise the upbeat October Consumer Confidence figures which rose to 108.7 percent, beating the consensus forecast figure of 99.5 percent.

Gold price analysis

On the chart below, the momentum shows that gold price will likely stay on the upward trajectory if the action stays above 2,758. In that case, the first resistance could come at 2,765. However, a prolonged control by the buyers could breach that barrier to take the price to test 2,769.

Alternatively, moving below 2,758 will favour the sellers to be in control. With that, the first support could be established at 2,755. However, an extended downward momentum could break below that level and invalidate the upside narrative. Also, the decline could extend to test 2,750.