HG MARKETS:

Gold prices are struggling to sustain an intraday recovery and remain below the key $2,748-$2,750 resistance zone during early European trading on Monday. Ongoing geopolitical tensions in the Middle East and uncertainty surrounding the U.S. elections continue to underpin safe-haven demand, providing some support to the precious metal. Additionally, a modest pullback in the U.S. Dollar (USD) from its highest level since July 30 further bolsters gold’s appeal.

However, expectations of smaller rate cuts by the Federal Reserve (Fed) and concerns over post-election deficit spending keep U.S. Treasury yields elevated, capping the upside for non-yielding assets like gold. Furthermore, the market’s positive risk sentiment weighs on the metal, with traders exercising caution ahead of key U.S. economic releases this week, including the Advance Q3 GDP, the Personal Consumption Expenditures (PCE) Price Index, and the Nonfarm Payrolls (NFP) report.

Adding to the bearish sentiment, the China Gold Association (CGA) reported a decline in gold demand from the world’s largest consumer during the first three quarters of 2024. Total consumption between January and September fell by 11.18% year-over-year to 742 tons. Demand for gold jewelry dropped 27.53% to 400 tons, while demand for gold bars and coins rose 27.14% to 283 tons. Industrial gold usage also saw a slight decrease of 2.78%, totaling 59 tons.

From a technical standpoint, repeated failures to sustain momentum beyond the $2,748-$2,750 supply zone raise caution for bullish traders. The recent consolidation within a narrow range suggests indecision among market participants about the next directional move. A decisive break above the $2,750 barrier or below the $2,720-$2,715 support range would provide clearer signals for near-term positioning.

A sustained move above $2,750 could allow gold to retest its recent high around $2,658-$2,659 and potentially advance toward the $2,770 level, aligning with a four-month ascending trend line resistance. A break beyond this point could target the psychological $2,800 mark.

Conversely, a drop below the $2,720-$2,715 support area may find initial buying interest around the $2,700 level. However, a decisive breach of this support could accelerate the corrective decline towards intermediate support at $2,675, with further downside potentially extending to the $2,657-$2,655 horizontal support zone.