XAUUSD - Gold Awaiting US ElectionsGold is below the EMA200 and EMA50 in the 4H timeframe.
In today's analysis, I have drawn trade scenarios for you based on various confirmations
In each circle we look for one-hour timeframe candles to confirm the expected trend.
After a grueling and controversial campaign season, the US election will be held this week. Although many experts believe a clear winner is unlikely to be announced on Wednesday, much of the uncertainty surrounding the US political landscape is expected to ease next week, which may not bode well for gold.
This precious metal had significant momentum last month due to the election fluctuations. Market analysts pointed out that the improvement of former US President Donald Trump's chances of victory and the creation of a potential "red wave" (a Republican victory) in Congress raised concerns about the continued unabated increase in government spending. In recent weeks, that fear has extended to either party's control of the White House and both houses of Congress.
However, there is a famous saying in the financial markets for times like this: "Buy the rumor and sell the news."
Last week, gold prices hit an all-time high above $2,800 an ounce as investors weighed in on rumors surrounding the US election.
Dennis Gartman, a noted commodity investor, said he has become more cautious about gold as it draws more attention from investors. However, he added that despite any near-term weakness, gold's long-term fundamentals are well supportive of prices.
"The main trend is still bullish," he said.
Aside from the geopolitical turmoil created by this election cycle, gold remains well-supported by the sluggish US economy and labor market.
In October, the US economy added just 12,000 jobs, well below expectations for 100,000 jobs. Some of the weakness can be attributed to fluctuations caused by cyclone devastation in southern states. However, looking beyond this volatility, sharp downward revisions in August and September suggest that the labor market is cooling.
At the same time, this week we also saw that inflation is continuously increasing. The main measure of personal consumption expenditures, the U.S. central bank's preferred measure of inflation, showed that consumer prices held steady at 2.7% over the past three months.
The Fed is stuck and will continue to cut interest rates as the labor market weakens. While interest rate cuts may not be as aggressive as they would like, higher inflation means lower real interest rates, which will hurt the US dollar and support gold prices.
