Gold Rally Ahead of the U.S. Election

• Gold is Poised at an all-time high as the U.S. election is approaching.

• Eyes on the Australian CPI reading due tomorrow and its implication on the lacklustre Aussie.

• BTC topped $70,000 in the last session on the Trump effect.

Market Summary

As the U.S. election draws near, safe-haven assets are gaining traction, with gold rallying back to its all-time highs and the U.S. dollar hovering close to recent peaks. Historical trends indicate that the Japanese yen tends to attract strong safe-haven demand during election years, having outperformed the dollar, Swiss franc, gold, and U.S. Treasuries in prior election cycles. With this track record, traders may anticipate a yen rally as November 5 approaches.

On the Australian dollar, attention will turn to the Australian CPI report due tomorrow, which is expected to indicate continued easing in inflation. An in-line reading could further weigh on the already soft Aussie dollar.

In the oil market, prices, which are at monthly lows, may find near-term support with the U.S. planning to refill its strategic reserves—a move that could lend support to oil prices.

Meanwhile, the crypto market has shown notable bullish momentum, with Bitcoin (BTC) crossing the $70,000 mark for the first time since June, nearing its all-time high of $73,000. This surge comes as market sentiment shifts, with Donald Trump, who is viewed as crypto-friendly, appearing to have increased chances of an election win, according to recent data.

Current rate hike bets on 7th November Fed interest rate decision:

Source: CME Fedwatch Tool

-50 bps (7%) VS -25 bps (97%)

Market Movements

DOLLAR_INDX, H4

The Dollar Index remains relatively flat as traders maintain a cautious stance in anticipation of key economic data and events later this week. Key upcoming releases include the Q3 Gross Domestic Product (GDP) estimate and several employment-related metrics, culminating in Friday's Nonfarm Payrolls (NFP) report. With market participants in a “wait-and-see” mode, the dollar‘s trend may shift based on these pivotal reports, which are expected to signal the Federal Reserve’s potential direction on monetary policy.

The Dollar Index is trading flat while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 55, suggesting the index might edge lower since the RSI retreated sharply from overbought territory.

Resistance level: 104.95, 105.55

Support level: 103.95, 103.45

XAU/USD, H4

Gold prices remain steady as investors await several impactful events that could drive safe-haven demand. The upcoming US election, Federal Open Market Committee (FOMC) interest rate decisions, and crucial US economic data releases are anticipated to introduce significant volatility in the gold market. As the week progresses, traders should monitor these events closely for actionable signals that may influence golds movement.

Gold prices are trading higher following the prior breakout above the previous resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 59, suggesting the commodity might extend its gains since the RSI stays above the midline.

Resistance level: 2755.00, 2770.00

Support level: 2735.00, 2707.30

CL OIL, H4

Oil prices have extended losses as investors interpret Israel's actions as avoiding potential disruptions to Irans oil and nuclear facilities, reducing immediate supply fears. Prices rebounded from support levels, driven by bargain buying and technical corrections. However, the long-term outlook for oil remains uncertain, with a slower economic growth outlook for major regions like the UK, EU, and a rise in electric vehicle adoption.

Oil prices are trading lower while currently testing the support level. However, MACD has illustrated increasing bullish momentum, while RSI is at 40, suggesting the commodity might experience technical correction since the RSI rebounded sharply from oversold territory.

Resistance level: 68.35, 69.90

Support level: 67.10, 65.55