Article by: ETO Markets
Gold prices slipped to a one-week low in Asian trading on Tuesday as some investors adjusted their positions ahead of the US presidential election. However, with increased election uncertainty and rising geopolitical risks in the Middle East, demand for gold as a safe-haven asset is likely to continue to provide support. In addition, expectations of further interest rate cuts by the Federal Reserve and signs of weakness in the U.S. job market have pushed down U.S. Treasury yields, which has also helped limit downward pressure on gold. Although the dollar bounced off a two-week low, it failed to gain significant momentum, which also provided some cushion for gold prices. In the coming days, the focus of the market will remain on the outcome of the US election and the policy decision of the Federal Reserve, which will have an important impact on the direction of gold.
From a technical point of view, gold prices encountered resistance near the upper limit of the upward channel since the end of July and subsequently retreated from all-time highs, showing signs of waning bullish momentum. However, the volatility indicators on the daily chart present mixed signals that caution is needed before further declines. If gold continues to move lower, the $…-$… level will provide initial support, and a break below this area could further test the lower edge of the upward channel around the $… area. Further selling could trigger a bigger pullback.
On the upside, the $…-$… area will be the near-term resistance level, followed by the psychological levels of $… and $…, followed by the resistance level of the upward channel around the $…. area. A sustained break above these resistance levels could provide fresh impetus for bulls to push gold higher and extend its recent uptrend.
