However, a stable US dollar and evolving Federal Reserve expectations keep an eye on further price increases.
Fed expectations limit gold’s upside potential
The US dollar, which hit a two-month high last week, has since consolidated its gains and offers little to push gold prices higher. With the Federal Reserve expected to cut rates by 25 basis points in November, there is little room for a significant decline in the USD.
“The Fed’s cautious approach to monetary easing is likely to limit any substantial gold rally,” analysts noted.
U.S. Treasury yields fell for a second day in response to weaker-than-expected economic data. The Empire State Manufacturing Index fell to -11.9 in October, the lowest reading since May, signaling a downturn in U.S. manufacturing.
Falling interest rates have given gold a boost as the metal’s non-yielding nature makes it more attractive in a low interest rate environment.
Geopolitical tensions fuel the demand for safe havens
Ongoing geopolitical tensions in the Middle East continue to drive gold demand. Conflicts in the region are increasing risk in the markets, with investors turning to safe havens for protection.