Gold News: Prices Rebound Despite Bearish Technical Signals

Gold Prices Edge Higher Despite Potentially Bearish Technical Signals

Gold prices are ticking upward on Thursday, recovering from a recent bearish chart pattern. Wednesday’s closing price reversal at $2758.53 indicated potential for a downturn, but the failure to break through the $2708.75 low kept the market afloat.

A confirmed drop below $2708.75 could spark a short-term correction, potentially pushing prices down to $2681.46. Conversely, any rally above $2758.53 would negate the bearish signal. Traders are eyeing the market’s overbought status, with the current price significantly above the 50-day moving average of $2594.49, adding to concerns.

At 11:31 GMT, XAU/USD is trading $2736.20, up $20.61 or +0.76%

Global Risks Support Gold Prices

Despite bearish technical signals, global geopolitical risks are propping up gold prices. Ongoing concerns about the U.S. elections, scheduled in 10 days, and broader geopolitical uncertainties have driven investors toward safe-haven assets like gold.

Carlo Alberto De Casa, an analyst at Kinesis Money, noted that gold’s ability to rebound from Wednesday’s lows reflects robust investor demand. Central banks are also playing a significant role in maintaining high prices, with their substantial bullion purchases providing ongoing support.

Gold has surged over 33% year-to-date, driven by its status as a safe store of value. Additionally, expectations of further monetary easing from major central banks are boosting the metal’s appeal.

However, ANZ analysts caution that the recent rally might lose momentum if the Federal Reserve pivots toward a gradual easing cycle rather than making deeper cuts, which could dampen gold’s upward potential.

Treasury Yields Retreat as Rate Cuts Come Into Focus

U.S. Treasury yields fell on Thursday, with the 10-year Treasury yield dropping over 5 basis points to 4.19%, after reaching a three-month high on Wednesday. Traders are digesting mixed signals from the Federal Reserve, which is taking a cautious approach to interest rate cuts.

Recent hawkish comments from Fed officials, such as Philadelphia Fed President Patrick Harker’s preference for a “slow, methodical approach,” have tempered expectations for aggressive monetary easing.

The dollar, although lower, remains near a three-month high. Strong U.S. economic data and concerns over the pace of rate cuts continue to bolster the currency.

Rodrigo Catril, senior FX strategist at National Australia Bank, highlighted the market’s nervousness around Fed policies and the ongoing strength in the U.S. economy. In turn, this has put additional pressure on currencies like the yen, which weakened to 153.19 per dollar on Wednesday, the lowest since late July.

Market Forecast: Bullish Outlook Underpinned by Risks

While technical signals hint at potential corrections, the broader geopolitical and economic landscape supports a bullish outlook for gold prices in the short term. Persistent global uncertainties, central bank demand, and the expectation of further monetary easing continue to buoy gold’s appeal.

Any downward movement could be short-lived, with strong support likely near the $2680 mark. A break above $2758.53 would confirm a bullish continuation, while the market remains sensitive to evolving U.S. election risks and Fed policy signals. Traders should remain vigilant for key technical levels and global developments in the coming days.