Solid Gold Berjangka – Global gold prices attempted a rebound during Friday’s (October 30) trading session, following a dip to approximately US$3,965 per troy ounce—its lowest level since July 17. The recovery in XAU/USD was supported by a weakening US dollar—which declined for the third consecutive day—as well as a drop in US government bond yields.
US Treasury yields fell as investors sought out government bonds as a "safe-haven" asset, driven by concerns that the heavy spending by technology companies on artificial intelligence development might not yield commensurate returns. This sentiment weighed on the dollar, providing room for gold to stage an intraday recovery.
Gold also found support from growing hopes for a diplomatic solution in the Middle East. US Vice President JD Vance reportedly sent a direct letter to Iranian security official Mohsen Rezaei proposing the resumption of negotiations, while Qatar has put forward a new draft agreement aimed at ending the conflict involving Iran, the United States, and Israel.
Nevertheless, geopolitical risks remain elevated. Tensions between the Houthi group in Yemen and Saudi Arabia continue to escalate, while the prospect of new attacks by the US and Israel following the US midterm elections continues to loom over the market. Furthermore, Iran has claimed that four tankers struck naval mines in the Strait of Hormuz, heightening concerns over potential disruptions to energy supplies and pushing oil prices to their highest levels in months.
On the economic front, robust US data continues to act as a primary headwind for gold. US GDP grew by 3.4% year-on-year in the third quarter, up from 2.2% previously, while the Personal Consumption Expenditures (PCE) price index rose 0.5% month-on-month and 3.6% year-on-year. The core PCE index also increased by 0.3% month-on-month and 3.1% year-on-year, reinforcing expectations that the Federal Reserve may still raise interest rates in December. In the short term, the rebound in gold should be viewed with caution, as expectations for monetary tightening by the Federal Reserve remain strong. While a weaker dollar and declining yields may provide room for a recovery, the XAU/USD pair could face renewed selling pressure as long as U.S. economic data remains solid and inflation stays high. (srh)