• Gold hit a new record high on Wednesday due to escalating Middle East tensions.

• Market participants are uncertain about the looming US presidential election.

• Business activity in the US grew in October.

The gold outlook indicates a slight shift in sentiment as prices retreat from a recent record high. The decline came after US data in the previous session showed continued resilience, reducing Fed rate cut expectations. Nevertheless, gold is heading for its third week of gains amid safe-haven inflows.

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Gold hit a new record high on Wednesday as escalating Middle East tensions sent investors scrambling for safety. The conflict between Israel and Hezbollah escalated with the two exchanging missiles, dashing hopes for a near-term ceasefire. Furthermore, Israel hit Gaza, killing 17 people.

Elsewhere, market participants have been worried about the looming US presidential election. The tight race between Trump and Kamala has created uncertainty regarding the outcome. As a result, most traders prefer to stay on the sidelines or buy safer assets like gold.

However, by Thursday, prices eased as US data revealed a robust economy, reducing pressure on the Fed to lower borrowing costs. The first report showed that unemployment claims fell to 227,000 last week, while economists had forecast 243,000 claims. The drop indicated tight labor market conditions.

A separate report revealed that business activity in the US grew in October. Notably, the S&P 500 Global composite PMI rose from 54.0 to 54.3, indicating solid demand. The US economy has performed better than expected in recent weeks, shifting the outlook for Fed rate cuts. Market participants see an increasing chance that the Fed will only cut once more this year, weighing on gold.

Gold key events today

Traders are not expecting high-impact economic reports from the US. Therefore, they will likely monitor the Middle East war and the upcoming US election.

Gold price technical outlook: Bullish Momentum at Crossroads

On the technical side, gold has eased from recent highs and is challenging the 30-SMA support. The bullish trend was strong until it got near the 2760.33 level. Here, bears made large candles, leading to a retest of the 30-SMA. Moreover, the decline followed a bearish RSI divergence, revealing weakness in the uptrend.

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If bears break the SMA, gold might revisit the 2720.46 support near the 0.5 Fib level. Otherwise, the uptrend will continue with a new high above 2760.33.

https://www.forexcrunch.com/blog/2024/10/25/gold-outlook-us-data-triggers-subtle-sentiment-shift/