Meanwhile, gold is retreating after reaching a new high in its uptrend. Bulls recently paused near the 2790.03 resistance level. This was a new high in the uptrend, but the RSI revealed weakness. The RSI made a bearish divergence, indicating that bullish momentum is waning. At the same time, the RSI is now trading below 50, indicating strong bearish momentum.
As a result, the price broke below the 22-SMA support. The break signals a shift in sentiment that could lead to a downtrend. If Trump wins, the prospects for Fed rate cuts will change. The markets could expect a pause or reversal. Consequently, gold prices could collapse to retest the support levels at 2710.71 and 2630.39.
On the other hand, if Kamala wins, the price could recover due to the optimism over the rate cut. Therefore, it could break above the resistance level of 22-SMA and 2790.03, continuing the uptrend.
Main support levels
Support 1: 2710.71, a recent swing low
Support 2: 2630.39, a strong support and resistance level
Main resistance levels
Resistor 1: 2790.03, a recent swing high
Final thoughts
The long-awaited US presidential elections have arrived. A new Democratic president is likely to continue most of Biden’s policies and maintain the prospects for Fed rate cuts. Such an outcome would weigh on the dollar index and boost gold prices. On the other hand, a Republican victory would lead to many changes in fiscal policy that would impact inflation and interest rates. Higher inflation would boost the dollar and drive down the price of gold.
Meanwhile, market participants are still digesting recent US employment data, which reinforced expectations for a Fed rate cut. Immediately after the election, the FOMC meeting could provide clues about future steps that could also impact the dollar index gold.
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