Market Data 
- Gold climbs to new ATH at $2,774 as mixed US data bolsters expectations of a Fed rate cut in November.
- Safe-haven demand remains strong amid heightened Middle East conflict, Ukraine war, and rising odds for a Trump victory in US elections.
- Investors await key economic data this week, including GDP, Nonfarm Payrolls, and the PCE Price Index, which could impact the Fed’s path.
Gold hit a new all-time high (ATH) of $2,774 late in the North American session amid a risk-on mood and a retracement in US Treasury yields. Following the release of mixed US data on Tuesday, investors seem convinced that the Federal Reserve will lower borrowing costs at the November meeting.
The XAU/USD trades at $2,773, gains over 1%, within striking distance of cracking the ATH after bouncing off daily lows of $2,739.
The US Department of Labor revealed that the September Job Openings and Labor Turnover Survey (JOLTS) fell to its lowest level in three and a half years, missing analysts’ expectations. Meanwhile, October’s Conference Board (CB) Consumer Confidence showed its most impressive gain since March 2021.
Gold traded slightly below its opening price at the beginning of the week and is down by 0.15%, weighed down by rising US Treasury yields. Market players prepare for a busy economic docket in the United States (US), as the data will be crucial with investors looking for cues for the Federal Reserve’s (Fed) monetary policy path.
Meanwhile, traders are closely watching the upcoming US election on November 5. According to polling site FiveThirtyEight, Trump’s chances of winning have risen to 52% compared to 48% for Vice President Kamala Harris. Despite this, the Democratic nominee still holds a slight lead in most national polls.
Gold remains supported by safe-haven flows amid the ongoing conflict in the Middle East and the escalation of the war in Ukraine following reports that North Korea has sent troops to Russia.
Traders are also awaiting a busy economic schedule, which will feature a tranche of job data: ADP Employment Change, Initial Jobless Claims, and Nonfarm Payrolls.
Other data will be revealed like the Gross Domestic Product (GDP) for the third quarter of 2024, the ISM Manufacturing PMI, and the Fed’s preferred inflation gauge — the Personal Consumption Expenditures (PCE) Price Index.
Daily digest market movers: Gold price boosted amid upbeat mood
- The US Dollar Index (DXY), which tracks the Dollar’s value against a basket of six currencies, is flat at 104.27.
- US JOLTS for September diminished from 7.861 million to 7.443 million, below estimates of 7.99 million.
- The Conference Board (CB) Consumer Confidence in October improved to 108.7 from 99.1, exceeding the forecast of 99.5.
- The US Bureau of Economic Analysis will reveal Wednesday’s GDP for the third quarter. Estimates suggest the economy grew 3% QoQ.
- The Atlanta Fed GDP Now model suggests the economy grew by 3.3% in Q3 2024.
- Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 49 bps of Fed easing by the end of the year.
XAU/USD technical outlook: Gold price rallies to an all-time peak
Gold price rally resumed on Tuesday, set to test the $2,800 if buyers extend XAU/USD advance past $2,775. A breach of the latter will expose $2,800, followed by the psychological $2,850 mark and the $2,900 figure.
On the other hand, if sellers move in and push prices below $2,750, the next support would be $2,700. Up next the September 26 swing high, which turned support at $2,685, followed by the 50-day Simple Moving Average (SMA), which turned support at $2,603.
Momentum suggests the non-yielding metal could consolidate as the Relative Strength Index (RSI) remains bullish, aiming higher, breaking the last peak. This means that buyers are gathering steam.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
