Gold Soars

Gold bulls are celebrating today as the safe-haven asset breaks out to fresh all-time highs. The futures market has ballooned higher once again this week driven higher this week by dovish Fed expectations and the higher perceived likelihood of Trump winning the elections on the back of his assassination attempt this weekend.  The futures market is higher by around 3.5% this week, now up almost 9% from the June lows and looks poised for further gains while the current backdrop persists.

Powell Comments

Speaking this week, Fed chairman Powell noted that the Fed once again had full confidence that inflation was heading back to target on the back of last week’s data. CPI was seen falling for a third consecutive month, dropping back to 3% from 3.3% prior. Powell was seen stoking dovish expectations by signalling that the Fed could cut rates ahead of inflation falling back to target. Pricing for expected rate cuts through Q3 and Q4 jumped on the back of these comments with a September cut now almost fully priced in.

Trump Impact

On the political front, elevated expectations of a Trump winning are also feeding into bullish sentiment for gold. The prospect of a return to the nationalist and protectionist policies of a Trump presidency are seen as an added risk for global geopolitical uncertainty, fuelling safe-haven demand for gold. While this outlook holds, gold prices look likely to continue higher near-term.

Technical Views

The rally in gold has seen the market breaking out above the 2.427.54 level and above the bull channel highs. With momentum studies bullish, the focus is on a continuation higher while price holds above this level. Should we slip back below, 1.364.93 will be the next support level to watch.