On Tuesday (October 29th), the gold market was supported by uncertainty before the US elections and tensions in the Middle East. Spot gold prices (XAU/USD) rebounded to $2754 per ounce in early trading, just one step away from last week's historic high of $2758.45. Gold, as a safe haven asset, has once again attracted the attention of investors, who are cautious about the upcoming US economic data this week, which may provide new guidance for the Federal Reserve's interest rate hike path. The current high inflation level and possible interest rate adjustments by the Federal Reserve have further highlighted the safe haven nature of gold.

Geopolitics and election uncertainty drive up risk aversion demand

The recent geopolitical conflicts in the Middle East, the upcoming election results in the United States, and the uncertain attitude of the Federal Reserve towards interest rate policy have brought great uncertainty to the market. As one of the world's most popular safe haven assets, gold has attracted a large influx of funds. The tight election situation in the United States, coupled with the severe warning issued by the United States against Iran, has significantly increased market volatility before the election results are announced.

In addition, although global inflationary pressures still exist, the decline in Chinese gold consumption has also had a certain impact on global gold demand. The latest data from the China Gold Association shows that in the first three quarters of 2024, China's gold consumption decreased by 11.18% year-on-year, and high gold prices suppressed the purchasing demand in the jewelry market. However, with the tense situation in the Middle East and the uncertainty of the US election prospects, the safe haven appeal of gold seems to have surpassed the pressure brought by some weak physical consumption.

Approaching high levels, short-term bullish signals are evident

From a technical perspective, the price of gold is approaching historical highs and facing pressure in the resistance zone of $2758 per ounce. If the gold price breaks through the upward resistance of $2758, it will constitute a bullish signal and may further impact the $2782 or even $2800 mark.

After last week's price breakthrough, gold showed a clear strength, although the bullish momentum slowed down during the week, the relative strength index (RSI) on the daily chart is close to the overbought range. Analysts point out that if there is a pullback to the support range around $2722 in the short term, it may become a new round of entry opportunity. Otherwise, there is a high possibility that gold will continue to remain above $2758, and once it breaks through, it will test the resistance of the upward trend line over the past four months. The expected high is between $2775 and $2782.

On a daily basis, if the gold price fails to break through $2758, it may fluctuate within the range of $2735 to $2760, waiting for further market guidance. If there is a downward adjustment, attention should be paid to the support level of $2722, which is a key bearish target in the short term; If the price continues to fall below this support level, the next step may be to test the low-level support around $2700 and $2675.