Markets expect the Fed to cut interest rates this week with a 99% chance. Investors are looking at the impact of elections on future politics. According to analysts, gold breaking support may indicate a significant downward movement. Analysts predict that with Trump’s win, the gold price will rally to $2,900. On the other hand, they expect a temporary decline with Harris’ victory as a result of the election.
The focus of the markets is on the US elections: These levels are on the cards for gold!
Gold prices rose slightly on Monday. However, this reflected a cautious stance as traders awaited major events this week. cryptokoin.comAs you follow from , there are US presidential elections on Tuesday. Additionally, the Federal Reserve will make its interest rate decision on Thursday. While gold remained stable, prices briefly fell to a new low in early trading. It then stabilized above key support levels, indicating a downward trend.
The presidential race in the USA between Democratic candidate Kamala Harris and Republican Donald Trump remains uncertain. Investors are being particularly cautious. The analyst puts forward different expectations for gold depending on the election result:
A Trump win could accelerate gold towards $2,900 due to his inflationary policies, while a Harris win could bring a temporary decline as investors price a continuation of current policies.
Fed’s interest rate decision is another critical event
This election uncertainty also coincides with the policy meeting where a 0.25% interest rate cut from the Fed is expected. Fed Chairman Jerome Powell’s post-decision comments will provide more insight into future interest rate paths. Investors see the interest rate cut as almost 100%. He also expects Powell to signal additional rate cuts if economic data continues to show weakness.
The US dollar fell 0.6% on Monday, falling to its lowest level in two weeks. This made dollar-priced gold more attractive to international buyers. While the dollar index decreased to 103.63, the dollar lost value against the yen and the euro. The weakening of the dollar and the decline in Treasury yields, which caused the 10-year bond yield to fall by six basis points to 4.3%, increase gold’s appeal as an inflation hedge and safe haven asset.
Gold market forecast: There are downside risks!
Market analyst James Hyerczyk looks at the technical picture of gold and the market outlook. Gold is currently trading on the weak side of a minor pivot at $2,749.47, which is acting as resistance. The latest price movements follow last week’s reversal from the $2,790.17 high, which led to profit-taking among traders. This momentum shows that if gold continues downwards, it will test the bottom at $2,708.76. A break below this level could see the price challenge the interim 50% retracement level at $2,697.28, which could open the door for further declines towards the 50-day moving average near $2,628.78.
Considering the combination of profit taking and potential election volatility, downside risks will increase if gold cannot hold above $2,708.76. If it falls below this key level, it is possible for gold to test $2,697.28. Additionally, an acceleration towards $2,628.78 is also on the cards if the selling pressure continues. However, Trump’s victory and continued dollar weakness are likely to strengthen gold’s bullish potential. In this case, $2,900 is the target if the bullish drivers align. For now, investors could see a short-term bearish trend unless election results or Fed comments provide clear support.
