Gold hovers in an overbought zone, but upside still left
Gold, of late, has stopped showing much reaction to traditional drivers like the US yields, the US Dollar Index, key macroeconomic data, etc as bulls are now focused primarily on uncertainties over the US presidential election outcome. In addition, the metal is extending its gains on synchronised global rate cuts, ETF inflows and geopolitical factors also.
Spot gold closed with a gain of over 1% at $2721 on Friday, and was up nearly 2.2% on the week.
Geopolitical watch
The Biden Administration is pushing for an end to the Gaza war following the killing of the Hamas leader Sinwar; however, both Hamas and Israel intend to continue fighting. Safe haven appeal of the metal due to geopolitical tensions continues to be supportive of the raging Middle East war.
US Dollar Index and yields
The US Dollar continues to benefit from a string of strong US data and markets' expectations of Trump winning the US presidential election as an increase in tariffs may be positive for the greenback in the short term at least. The US Dollar Index, though it retreated on Friday, is sharply up from the cycle low of 100.15 reached on September 27. The Index, recording the third straight weekly gain, at 103.46 on Friday, was up around 0.60% on the week. The 2-year US yields closed at 3.95% on Friday, flat on a weekly basis, whereas the ten-year US yields at 4.07% were up nearly 1 bps on the week.
Data/event round-up
The US data released in the week ending on October 18 were largely encouraging as retail sales advance (September), NAHB
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