Gold fell to a one week low amid some repositioning moves ahead of the US election.
During the Asian session on Tuesday, the gold price (XAUUSD) attracts new sellers and falls to more than a one-week low, around $2,725-2,724 nevertheless, the downside appears cushioned. The uncertainty surrounding the hotly disputed US presidential race, combined with the potential of further escalation of geopolitical tensions in the Middle East, may continue to support the safe-haven precious metal.
Fed rate cut bets, dropping US bond rates, and weak USD demand may provide some assistance.
The unwinding The “Trump trade” and expectations that the Federal Reserve (Fed) will decrease interest rates further despite signs of a slowing US labor market resulted in a further decline in US Treasury bond yields. This does not help the US Dollar (USD) to build on its overnight recovery from a two-week low, and it should contribute to limiting any major depreciation of the non-yielding gold price.
Daily Market Movers: Gold price could continue to receive support from US political worries and Middle East woes.
According to recent surveys, Democratic candidate Kamala Harris and Republican Donald Trump locked in a close contest for the presidency, stoking political anxiety.
Former President Donald Trump’s winning odds drastically decreased, triggering some unwinding of The “Trump Trade” is pushing down US Treasury bond yields.
The benchmark 10-year US government bond yield and the two-year Treasury note rate both fell the most in a single day in two months and almost three weeks.
A portion of the drop in US bond yields could also be linked to increased bets on more interest rate cuts by the Federal Reserve, aided by evidence of a worsening US labor market.
Iran indicated that it will respond harshly to Israel’s late-October assault on its land, while the United States explicitly urged Iran not to conduct another attack against its partner Israel.
Tuesday’s US economic docket sees the release of the ISM Manufacturing PMI later during the US session, but it may accomplish little to give any impetus ahead of the United States presidential election.
