Last week, the Bank of Japan showed a more hawkish stance, which led to strong selling of gold. Although there was some buying back afterwards, U.S. long-term interest rates rose towards the weekend, causing gold to drop again. Gold reached a new high of 2790, but was pushed back to 2740, resulting in a back-and-forth movement.
This week brings the year’s biggest events: the U.S. presidential election and the Federal Open Market Committee (FOMC) meeting. Due to the risks these events bring, gold is expected to stay strong at the beginning of the week. The presidential election is very close, making it hard to predict who will win. Regardless of who becomes president, the U.S. long-term interest rates are expected to rise due to increased budget deficits, which could lead to selling of gold since it does not yield interest.
On the other hand, the FOMC meeting is expected to result in a 0.25% rate cut, which could support gold buying. However, if Chair Jerome Powell indicates reluctance for future rate cuts, gold may turn upward. Also, geopolitical risks, like the conflicts between Israel and Iran and Ukraine and Russia, continue to simmer, supporting a medium-term upward trend in gold. Overall, gold appears likely to attract buying when prices dip.
Gold-Dollar Forecast Range for This Week: $2810 to $2670
Please note that the information above does not guarantee profits, so make your own decisions when trading.