Gold (XAU) Price Forecast: Bullish Momentum Holds, But Is a Pullback Looming?

Gold Hits Record Highs Amid Strong Dollar and Pre-Election Jitters

Gold prices surged to a new record high of $2,758.53 on Wednesday, despite the strength of the U.S. dollar. This marks an extension of the upward trend established since the October 10 low of $2,604.39, driven by a pattern of higher-lows and higher-highs. With no immediate resistance in sight, traders may look to book profits, watching closely for any signs of a reversal or break in the current price pattern.

The bullish sentiment surrounding gold remains firm, supported by safe-haven demand ahead of the U.S. presidential election and escalating geopolitical tensions in the Middle East. Investors are increasingly nervous as opinion polls show a tight race between President Donald Trump and Vice President Kamala Harris, while rising U.S. Treasury yields have strengthened the dollar, traditionally a headwind for gold.

At 10:50 GMT, XAU/USD is trading $2750.40, up $1.45 or +0.05%.

Rising Yields and Fed Uncertainty Support Dollar Strength

U.S. Treasury yields have been climbing, with the 10-year yield reaching 4.2316%, a three-month high, as markets reassess the Federal Reserve’s next moves. Economic data in the U.S. continues to show resilience, with job creation and growth suggesting that the Fed may not cut rates as aggressively as previously anticipated. While markets had priced in a full percentage point cut by January, expectations have shifted to just a half-point reduction.

This rise in yields has bolstered the dollar, which is trading at multi-month highs against major currencies like the yen and euro. The yen, in particular, has been under significant pressure, now trading at 152 per dollar, levels that have prompted warnings from Japanese officials.

Middle East Conflict Adds to Safe-Haven Demand

In addition to the economic backdrop, heightened geopolitical risks are providing further support to gold. Ongoing conflict in the Middle East is prompting investors to seek refuge in safe-haven assets, with gold being a primary beneficiary. This has helped the precious metal defy the rising dollar, which would typically limit its upside.

The political uncertainty surrounding the U.S. election, along with the potential for inflationary policies under a Trump administration, is further driving demand for gold. Investors are weighing the possibility of increased tariffs and fiscal stimulus, which could lead to higher inflation, another factor that supports gold as an inflation hedge.

Market Outlook: Bullish Sentiment Prevails

Despite the possibility of short-term corrections, gold remains in a bullish trend, with strong technical support from the 50-day moving average at $2,589.60. As long as prices stay above this key level, any pullbacks are likely to be seen as buying opportunities. However, if the price moves too far from this support, the market becomes more vulnerable to a near-term correction.

In the short term, gold prices are expected to continue rising, supported by election uncertainty, geopolitical risks, and strong demand from risk-averse investors. Traders should remain cautious of a potential high-volume reversal, but the overall outlook remains bullish for the precious metal.