25 Oct 2024

Gold (XAU/USD) remains confined within this week's narrow range, trading in the $2,720s on Friday. The precious metal continues to benefit from safe-haven demand, driven by elevated geopolitical risks. The ongoing conflict in the Middle East, coupled with growing uncertainty regarding the outcome of the US elections, are significant factors prompting investors to seek refuge in assets like Gold.

Gold continues to receive support as geopolitical risk premiums increase. The intensification of the conflict in the Middle East is expected to sustain safe-haven flows towards Gold. On Friday, Reuters reported the tragic deaths of three Lebanese journalists in a bombing targeting a guesthouse frequented by international media representatives, including Al Jazeera, Sky, and Reuters.

This comes at the end of a week that has seen the Israelis up their bombing campaign, wiping out entire residential blocks of neighborhoods in Beirut, including a bomb that landed close to a hospital and ended the life of a child, as well as an attack that killed three Lebanese army soldiers organizing an evacuation. 

In Doha, US Secretary of State Anthony Blinken is engaged in discussions with representatives from Israel and Qatar in an effort to negotiate a resolution to the ongoing conflict. This initiative follows a separate meeting held in Cairo, where Egyptian diplomats conferred with members of Hamas, who are also working towards the same goal.

However, Osama Hamdan, a senior official of Hamas, informed the Lebanese pro-Hezbollah news outlet Al-Mayadeen that there has been no alteration in the group's stance. "The hostages held by the resistance will only be released upon the cessation of aggression and a complete withdrawal," Hamdan stated, as reported by Reuters.

Compounding the geopolitical uncertainties is the development that Republican nominee Donald Trump is gaining traction in numerous polls, particularly in critical states such as Wisconsin and North Carolina. This trend indicates a significant possibility of his success in the upcoming US presidential election.

“An Emerson poll conducted yesterday across several battleground states showed Trump with a slight advantage, including a 1-point lead in Pennsylvania and Wisconsin, and a 2-point lead in North Carolina," remarked Jim Reid, Global Head of Macro Research at Deutsche Bank, on Friday.

According to the model from the prominent US election website FiveThirtyEight, Trump currently possesses a marginally increased 51% probability of winning.

Nonetheless, the website’s comprehensive poll, which aggregates, averages, and weighs polls based on recency, indicates that Vice President Kamala Harris maintains a lead with 48.1% compared to Trump’s 46.4%. Most betting platforms provide more favorable odds for Trump over Harris.

A victory for Trump could disrupt the current geopolitical landscape and potentially enhance safe-haven investments, despite his assertions that he could resolve global conflicts within a matter of days.

Technical Analysis: Gold consolidates in a sideways band

Gold trades sideways in a mini range between $2,708 and $2,758 after peaking at the later level and rolling over.

That said, the yellow metal is in a steady uptrend on all time frames (short, medium and long) which given the technical principle that “the trend is your friend” the odds favor more upside. 

A break above the top of the range at $2,758 would help confirm a continuation up to the next big-figure target level lies at $3,000 (round number and psychological level).