Gold Market comment

31 Ekim 2024

Today’s market analysis on behalf of Ahmad Assiri Research Strategist at Pepperstone

Gold has been hovering just below $2,790/oz, briefly losing steam and retreating toward $2,770/oz, indicating persistent selling pressure that has yet to shake the metal’s enduring role as a hedge. This recent consolidation reflects a balance of short-term profit-taking and investor positioning, with the upcoming U.S. election, potential Fed rate cut, and looming potential tariff if a republican sweep is realized all adding a layer of uncertainty and appeal to risk-hedging instruments like gold. Amid these conditions, gold’s technical resilience suggests that recent pullbacks are temporary rather than trend-defining, as renewed buyer interest quickly stabilizes price declines.

As a hedge, gold’s appeal also strengthens when fiscal policy is perceived as excessive or potentially inflationary, acting as a reliable store of value in periods of heightened spending or debt accumulation. The anticipated volatility tied to U.S. election results and shifting policy expectations likely sets the stage for heightened hedging activity, reinforcing gold’s value and appeal.

A potential Fed rate cut next week could bolster gold’s upside by driving real yields lower, enhancing its appeal as a non-yielding. Meanwhile, a possible red sweep in the U.S. election would likely mean higher tariffs on non-U.S. goods, potentially strengthening the dollar. This scenario could initially exert pressure on gold but may ultimately reinforce its attractiveness as a hedge. In Asia, where investors actively seek strategies to offset dollar strength, this environment may encourage further accumulation of gold to balance currency risks.

Given gold’s recent resistance around $2,770, it seems likely that the $2,790 level could be retested as markets absorb the outcomes of these key events. If further fiscal expansion and heightened market volatility take hold, gold may well break above the $2,790 resistance, paving the way for an ascent into new territory in the medium term.

 

Zaid Barem / YMM