Bullish Sentiment Building

Gold prices are fast approaching a fresh test of record highs this week as bullish momentum continues to drive the safe-haven metal higher. The rally in gold comes despite a similar rally in USD, with the Dollar Index trading at its best level since August. Traders have paired back their Fed easing expectations recently. While a cut is still prices in for November, previous forecasts of a larger .5% cut have been fully reversed with traders now looking for a quarter-point move, in line with the Fed’s signalling and better US jobs data recently. Traders will now be looking to tomorrow’s US retail sales figures for the latest insight into how the economy is performing.

Safe-Haven Inflows

Despite the less-dovish outlook, gold prices are continuing higher here, suggesting that focus is simply on the projected, continued easing itself. Additionally, market volatility and global geopolitical uncertainty are likely stoking demand here. A sharp drop in Chinese equities recently amidst disappointment over recent Chinese stimulus is certainly one factor likely driving safe-haven inflow for gold.

Alongside this, heightened fears over conflict in the Middle East is linked to sustained safe-haven inflow also. News of a fresh Israeli attack on Beirut, despite pressure from the US, highlights the ongoing risk as the world prepares for an Israeli counterattack on Iran. While the situation there remains so precarious, gold prices look likely to retain support going forward.

Technical Views

Gold

The market is now testing the all-time highs around 2,684.76 again following a strong bounce off 2,604.56. Focus is on a breakout and continuation here with the 2,684.76 to serve as a platform once price move higher. Below, 2,604.56 and the bull channel highs remain key support to note.