Gold Rally Ahead of the U.S. Election

• Gold is Poised at an all-time high as the U.S. election is approaching. 
• Eyes on the Australian CPI reading due tomorrow and its implication on the lacklustre Aussie. 
• BTC topped $70,000 in the last session on the Trump effect. 

Market Summary

As the U.S. election draws near, safe-haven assets are gaining traction, with gold rallying back to its all-time highs and the U.S. dollar hovering close to recent peaks. Historical trends indicate that the Japanese yen tends to attract strong safe-haven demand during election years, having outperformed the dollar, Swiss franc, gold, and U.S. Treasuries in prior election cycles. With this track record, traders may anticipate a yen rally as November 5 approaches.

On the Australian dollar, attention will turn to the Australian CPI report due tomorrow, which is expected to indicate continued easing in inflation. An in-line reading could further weigh on the already soft Aussie dollar.

In the oil market, prices, which are at monthly lows, may find near-term support with the U.S. planning to refill its strategic reserves—a move that could lend support to oil prices.

Meanwhile, the crypto market has shown notable bullish momentum, with Bitcoin (BTC) crossing the $70,000 mark for the first time since June, nearing its all-time high of $73,000. This surge comes as market sentiment shifts, with Donald Trump, who is viewed as crypto-friendly, appearing to have increased chances of an election win, according to recent data.

Current rate hike bets on 7th November Fed interest rate decision: 

Source: CME Fedwatch Tool

-50 bps (7%) VS -25 bps (97%) 

Market Movements

DOLLAR_INDX, H4

The Dollar Index remains relatively flat as traders maintain a cautious stance in anticipation of key economic data and events later this week. Key upcoming releases include the Q3 Gross Domestic Product (GDP) estimate and several employment-related metrics, culminating in Friday's Nonfarm Payrolls (NFP) report. With market participants in a “wait-and-see” mode, the dollar’s trend may shift based on these pivotal reports, which are expected to signal the Federal Reserve’s potential direction on monetary policy.

The Dollar Index is trading flat while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 55, suggesting the index might edge lower since the RSI retreated sharply from overbought territory. 

Resistance level: 104.95, 105.55

Support level: 103.95, 103.45

XAU/USD, H4

Gold prices remain steady as investors await several impactful events that could drive safe-haven demand. The upcoming US election, Federal Open Market Committee (FOMC) interest rate decisions, and crucial US economic data releases are anticipated to introduce significant volatility in the gold market. As the week progresses, traders should monitor these events closely for actionable signals that may influence gold’s movement.

Gold prices are trading higher following the prior breakout above the previous resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 59, suggesting the commodity might extend its gains since the RSI stays above the midline. 

Resistance level: 2755.00, 2770.00

Support level: 2735.00, 2707.30

GBP/USD，H4

The GBP/USD pair remains capped below its short-term resistance at 1.2990 but has formed a higher-low pattern, hinting at potential bullish momentum. A break above this resistance could serve as a bullish signal, possibly indicating a shift toward an upward trend. The upcoming U.S. JOLTS job openings data, due today, is anticipated to be a critical factor influencing the pair’s movement, as strong data could reinforce dollar strength while softer numbers might provide GBP/USD with room to test higher levels.

GBP/USD faced resistance at near 1.2990, a breakthrough from such a level shall be a bullish signal for the pair. The RSI is gradually moving upward while the MACD is on the brink of breaking above the zero line, suggesting the bearish momentum is vanishing. 

Resistance level: 1.3045, 1.3125

Support level: 1.2940, 1.2850

USD/CHF，H4

The USD/CHF pair experienced a MACD bearish divergence and recently saw a technical retracement after reaching its highest level since August. Should the pair fail to hold above the 0.8640 level, it could signal further bearish movement. With the Swiss franc traditionally viewed as a safe-haven currency, demand may rise as the U.S. presidential election nears, potentially leading to further retracement in the pair as election day approaches.

The USD/CHF is currently finding support above the 0.8640 mark; a break below such a level shall be seen as a trend-reversal signal for the pair. The RSI has broken below the 50 level while the MACD is on the brink of breaking below the zero line, suggesting the bullish momentum vanishes. 

Resistance level:0.8673, 0.8715

Support level: 0.8614, 0.8560

GBP/JPY, H4

The GBP/JPY pair saw a notable jump in yesterday’s session as the market reopened post-weekend, though it’s anticipated that the pair may fill in the gap before resuming its bullish trajectory. On the fundamental side, Japanese Prime Minister Fumio Kishida pledged to restore political stability after the ruling party lost its majority in the lower house following last weekend’s snap election. This promise of stability could bolster the Japanese yen, potentially leading the GBP/JPY pair to retrace further from its recent highs. 

After the pair jumped in yesterday's session, GBP/JPY has eased from its bullish momentum. The RSI remains above the 50 level while the MACD edges higher, suggesting the bullish momentum remains intact with the pair. 

Resistance level: 199.10, 201.00

Support level:  197.60, 196.00

Nasdaq, H4

US equities are set for a high-impact week, with major tech earnings reports on the horizon. Last week’s lack of significant catalysts left the market flat, yet anticipation is building around “The Magnificent Seven” technology stocks reporting this week. Alphabet (GOOGL) is scheduled for Tuesday, followed by Meta Platforms (META) and Microsoft (MSFT) on Wednesday, with Apple (AAPL) and Amazon (AMZN) rounding out the week on Thursday. The Nasdaq reached a record intraday high as investors ramp up their positions in anticipation of these releases, which may shape the short-term equity trend.

Nasdaq is trading higher while currently testing the resistance level. MACD has illustrated diminishing bearish momentum, while RSI is at 56, suggesting the index might extend its gains after breakout since the RSI stays above the midline. 

Resistance level:  20415.00, 21075.00

Support level:  19705.00, 19120.00

BTC/USD, H4Bitcoin (BTC) surged past the $70,000 mark for the first time since July, rallying nearly 3% in the last session and signalling a bullish outlook. Speculation around Donald Trump’s potential return to the U.S. presidency has amplified this sentiment. Trump’s pro-crypto stance during his campaign has injected optimism into the market, as investors anticipate favourable policies for digital assets if he were to win. This backdrop is boosting BTC prices ahead of the election, with market participants keeping a close eye on election developments and BTC’s ability to hold its gains above this key level.

BTC has gained more than 5% this week, reaching its recent high, suggesting a bullish bias for the pair. The RSI has broken into the overbought zone, while the MACD shows signs of rebounding, suggesting that bullish momentum is gaining. 

Resistance level: 73660.00, 77100.00

Support level: 67500.00, 64780.00

CL OIL, H4

Oil prices have extended losses as investors interpret Israel's actions as avoiding potential disruptions to Iran’s oil and nuclear facilities, reducing immediate supply fears. Prices rebounded from support levels, driven by bargain buying and technical corrections. However, the long-term outlook for oil remains uncertain, with a slower economic growth outlook for major regions like the UK, EU, and China, and a rise in electric vehicle adoption. 

Oil prices are trading lower while currently testing the support level. However, MACD has illustrated increasing bullish momentum, while RSI is at 40, suggesting the commodity might experience technical correction since the RSI rebounded sharply from oversold territory. 

Resistance level: 68.35, 69.90

Support level: 67.10, 65.55