Although the US dollar recovered from its losses since the beginning of trading this week, Gold futures contracts XAU/USD are trying to stay above the $1700 level an ounce.
- Gold gains extended to the $1722 resistance level, its highest in a month, before prices settled around the $1702 level at the time of writing the analysis.
- The performance came as investors absorb the mid-term elections for 2022.
- The United States is preparing for the important US inflation report on Thursday.
- The yellow metal has performed well this week and trimmed its year-to-date loss by a significant pace.
Who will hold the keys to power?
Many of the major 2022 election races are still in the process of being seized, which means voters are still unclear about who will hold the keys to congressional power. Pollsters and analysts had been expecting a so-called red wave, but it was more ripple on Tuesday. At the time of writing, the Republicans have 220 seats and the Democrats 215 in the House of Representatives. On the Senate side, the Democrats have 48 seats and the Republican Party 47. There are several very early races, including in Arizona, Georgia, Nevada and Wisconsin.
Economic Outlook
US mortgage applications fell 0.1% for the week ending November 4 as the 30-year mortgage rate rose to 7.14%. The Business Optimism Index released by the National Federation of Independent Business (NFIB) fell to 91.3 in October. The IBD/TIPP Economic Optimism Index also fell to 40.4.
On Thursday, US inflation data for October will be released, and markets are expecting an 8% reading. Core inflation, which removes food and energy price volatility, is expected to fall to 6.5%. The Cleveland Fed Nowcast shows annual inflation coming in at 8.1% and core inflation coming in at 6.8%. Historically, the regional central bank has underestimated inflation for 16 of the past 19 months.
The US Treasury market was mostly in the green, with the 10-year bond yield rising 2.7 basis points to 4.155%. One-year yields rose one basis point to 4.77%, while 30-year yields advanced 4.9 basis points to 4.309%. The US Dollar Index (DXY), which measures the greenback against a basket of major currencies, rose to 110.13, from an opening at 109.64. The index has struggled this month, down nearly 3%. Since the start of 2022 to date, the index has increased by approximately 15%. A weaker dollar is beneficial for dollar-priced commodities because it makes them cheaper to buy for foreign investors.
In other metals markets, copper futures were unchanged at $3.68 a pound. Platinum futures fell to $1,004.10 an ounce. Palladium futures fell to $1,888 an ounce.
XAU/USD Gold Price Forecast Today:
The stability of the XAU/USD gold price will remain around and above the psychological resistance of 1700 dollars an ounce. This is important for more control of the bulls on the trend and supports more technical buying deals. This is especially if the US inflation numbers come in less than expectations, taking into account that technical indicators have reached overbought levels. If gold does not gain momentum, it may be exposed to profit-taking operations at any time, especially if US inflation figures are stronger than expectations. The gold price will abandon its current path if prices return to the levels of 1688 and 1660 dollars an ounce again.
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