Gold (XAU) Daily Forecast: US Election Jitters and Fed Rate Outlook Weigh on Gold’s Safe-Haven Status

Market Overview

Despite market tensions, gold prices (XAU/USD) opened bearish on Tuesday, slipping to around $2,724, marking a one-week low.

Traditionally viewed as a safe-haven asset during times of political uncertainty, gold is facing downward pressure amid a strengthening U.S. dollar and investor caution ahead of a close U.S. presidential election.

Gold’s decline is primarily driven by the recovering U.S. dollar, which steadied after hitting a two-week low. With focus shifting to the tight race between Democratic candidate Kamala Harris and Republican Donald Trump, the dollar has found renewed support as a hedge against potential election turbulence.

Meanwhile, the upcoming Federal Reserve meeting has markets bracing for a possible 0.25% rate cut, as bond yields dip in response to weaker labor market data.

The dollar’s resilience has dampened gold’s usual safe-haven appeal, as investors hedge against potential volatility by holding onto dollars instead of precious metals.

U.S. Dollar Gains Curb Gold’s Safe-Haven Appeal

As political uncertainty intensifies, the U.S. dollar has recovered from early losses, limiting gold’s upward potential. Polls indicate a close presidential race, heightening risk sentiment, which typically favors gold.

However, the stronger dollar, supported by lower U.S. Treasury yields, is outweighing the safe-haven appeal of gold. Market strategist Alex Brown notes, “While political uncertainty can drive gold, the dollar’s recovery is preventing a rally in gold prices.”

Meanwhile, expectations of further rate cuts by the Federal Reserve are rising, especially with weakening labor market data signaling potential economic slowing.

The latest ISM Manufacturing PMI data, set to be released soon, may add clarity, but most investors are focused on election outcomes, limiting gold’s immediate upside.

Geopolitical Tensions Add Limited Support to Gold

Ongoing geopolitical tensions, particularly in the Middle East, continue to lend some support to gold, but these factors are not enough to offset the dollar’s strength.

Increased tensions are evident as regional powers engage in retaliatory threats, raising concerns about potential escalations. While such instability often boosts gold as a defensive asset, the effect is muted by a robust dollar and cautious investor sentiment.

Short-Term Forecast

Gold (XAU/USD) remains under pressure near $2,737, with short-term support at $2,732 and resistance at $2,748. A descending triangle hints at further bearish movement if prices break below the pivot at $2,739.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is currently trading around $2,737.16, slipping slightly by 0.02% as it navigates a critical pivot at $2,739.67. A descending triangle pattern is shaping up on the 4-hour chart, typically indicating bearish potential if gold breaks below this pivot level.

Immediate support is found at $2,731.98, followed by stronger floors at $2,724.73 and $2,717.08. If gold manages to hold above $2,739, it could attempt a move toward immediate resistance at $2,748.48, with further targets at $2,754.58 and $2,762.54.

Technical indicators lean slightly bearish, with both the 50-day EMA at $2,742.34 and the 200-day EMA at $2,742.67 positioning overhead resistance. Watch for a break above $2,739 to signal any bullish recovery.