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In a market driven by persistent Middle East tensions, the Gold prices rebound (XAU/USD) stands strong at $1,970 on Wednesday. This resurgence can be attributed to a significant drop in long-term US bond yields. Thus, supporting the appeal of the precious metal.
Ongoing Middle East Tensions
The ongoing Israel-Palestine conflict has heightened the geopolitical climate, increasing the demand for safe-haven assets like gold. As Israeli troops prepare for potential action in Gaza, the specter of Iran’s involvement looms, amplifying market uncertainty.
US Dollar Gains Strength
Meanwhile, the US Dollar experiences a boost in its value, following S&P Global’s report indicating an upswing in US business activity for Gold prices October. Despite surging interest rates and multi-year high US bond yields, the US economy appears to be managing higher borrowing costs effectively.
Economic Indicators Awaited
Investors eagerly await the release of Q3 GDP data and the Federal Reserve’s preferred inflation gauge. These indicators could play a crucial role in shaping the Fed’s November policy decisions. With the potential to influence interest rates and market sentiment.
Gold Prices Rebound Short-Term Resilience
The short-term outlook for rebound remains optimistic, given the ongoing Middle East tensions and the potential Israeli military involvement in Gaza. This resilience is further supported by a decrease in 10-year US Treasury yields, now resting at 4.83%, as investors shift their focus towards economic data.
Upcoming Gold prices Economic Data
Economists predict a 4.2% annualized growth rate for the US economy in the third quarter, compared to the 2.1% growth rate observed in the previous quarter. Furthermore, the core Personal Consumption Expenditure (PCE) price index is expected to show higher monthly growth, with an annual core PCE inflation rate anticipated to slow to 3.7%.
Read more: European Economic Data Drives Oil Prices Down for Third Consecutive Day
Federal Reserve Expectations
Market sentiment suggests the Fed will likely maintain interest rates at the current 5.25%-5.50% range. However, there’s a 27% chance of one more interest rate hike on Gold price rebound in one of the remaining 2023 monetary policy meetings. Fed policymakers aim to keep interest rates stable to reduce overall spending and investment.
Shift in Gold Prices Market Sentiment
Contrary to recent trends, S&P Global’s report on improved US business activity in October has momentarily diminished the appeal of gold. Strong demand conditions, outperforming expectations, and an optimistic sentiment about interest rates have caused the US Dollar to recover, while the European economy reports a downtick in business activity due to increased borrowing costs.
Technical Analysis: Gold’s Current Status
As investors await key US economic data later in the week, Gold prices rebounds remains directionless around the $1,970 mark. The precious metal continues to trade near a five-month high, with short-term Exponential Moving Averages (EMAs) indicating a bullish trend. Momentum oscillators further support the notion that the bullish impulse remains strong in the market.
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Disclaimer:
Please note that this article serves solely for informational purposes. As such, Gold prices it is not financial advice. We strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.
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