Yesterday, gold experienced some downward movement before consolidating, prompting traders to adopt a cautious approach. The current strategy involves waiting for the price to break above or below key zones, specifically focusing on levels around 2330 and 2307, before executing trades.
Adding to market uncertainty are escalating geopolitical tensions in the Middle East. Furthermore, currency markets are reflecting heightened volatility expectations surrounding the upcoming US election on November 5th, despite it being six months away. Notably, options trading on the Chinese offshore yuan indicates a significant increase in implied volatility, suggesting traders are preparing for potential market turbulence.
Analysis suggests traders are anticipating a binary outcome from the election, with a victory for Donald Trump likely leading to increased volatility and a subsequent selloff in the offshore yuan. This scenario echoes patterns observed during the 2016 election cycle when Trump first ran for president.
In terms of monetary policy, Federal Reserve official Kashkari maintains a cautious stance, indicating that it is premature to declare stalling on inflation. Kashkari emphasizes the Fed's commitment to achieving its 2% inflation target, suggesting that interest rates may be held or raised if necessary.
Recent economic data shows a slight slowdown in credit-card borrowing growth in March, following a significant increase in the prior month. This deceleration is attributed to the slowest pace since April 2021. Nonrevolving loans, primarily consisting of student and auto loans, also saw a modest increase, indicating ongoing economic dynamics.
Given these factors, traders are advised to remain vigilant and adapt their strategies, accordingly, considering the potential impact of geopolitical events and monetary policy shifts on gold prices.