Gold prices surged on Thursday as US Treasury yields declined, causing investors to flock to safe-haven assets such as gold. Geopolitical tensions in the Middle East and concerns surrounding the upcoming US election have also played a role in boosting demand for gold. At the same time, the US economy showed signs of resilience, with strong labor market data and better-than-expected PMI results, despite mixed housing data.
Analysts have pointed to rising US fiscal debt concerns as a key factor supporting the rally in gold prices. The uncertainty surrounding the outcome of the US election has added to the appeal of gold as a safe-haven asset. Former President Donald Trump’s perceived edge over Vice President Kamala Harris in the upcoming election has heightened market uncertainty.
In the midst of these global uncertainties, US Treasury yields have fallen, with the 10-year Treasury note yield dropping by five basis points. The US Dollar has also weakened, further supporting the rise in gold prices. Positive data on the US labor market and manufacturing sector have added to market optimism, despite concerns about the US fiscal debt outlook.
Gold’s technical outlook remains bullish, with the XAU/USD trading above $2,730. The Relative Strength Index (RSI) suggests that buyers are stepping in, with the potential for the price to surpass resistance levels and reach $2,800. However, if prices fall below key support levels, the next support levels could be at $2,699, $2,681, and $2,662.
Gold has historically been used as a store of value and medium of exchange, and is widely viewed as a safe-haven asset during turbulent times. Central banks are among the largest holders of gold, using it to support their currencies and increase trust in their economies. The metal has an inverse correlation with the US Dollar and US Treasuries, and is often influenced by geopolitical instability and global economic conditions.
Overall, the current uncertainties surrounding the US election, geopolitical tensions in the Middle East, and concerns about rising US fiscal debt have combined to support the rally in gold prices. With investors seeking safer assets amid market volatility, gold continues to attract demand as a reliable store of value and hedge against economic uncertainties.
