Gold Price Falls as Israeli Ground Attack Delay Dims Safe-Haven Asset Appeal

• Gold price struggles to find direction as investors look for news on the conflict between Israel and Hamas and crucial US economic data.
• The dollar and bond yields fall ahead of third-quarter GDP and the Fed’s preferred inflation gauge.
• The US manufacturing PMI is expected to remain below the 50.0 threshold for the twelfth consecutive time.

The price of Gold (XAU/USD) falls near Monday’s low as investors look for new developments surrounding tensions between Israel and Palestine. Meanwhile, the US is urging Israel’s military to delay a ground assault on Gaza, giving preference to hostage release operations and sending humanitarian aid to civilians. Additionally, investors await the release of crucial economic indicators, which will determine the Federal Reserve’s (Fed) outlook for interest rates.

The price of Gold remains supported, in general, while Israel continues with air attacks in Gaza, which have left more than 5,000 dead and 15,000 injured. Meanwhile, long-term bond yields and the dollar decline as investors hope the Fed has stopped raising interest rates. Looking ahead, investors will focus on Gross Domestic Product (GDP) data for the July-September quarter and the Fed’s preferred inflation indicator for September, the core personal consumption expenditure (PCE) index.

Daily summary of market drivers: The price of Gold declines, while the Dollar and bond yields rebound

• Gold is trading mixed around $1,980 as investors await new information on the Israel-Palestine conflict and crucial US economic data this week.
• The overall outlook for the gold price remains optimistic as tensions in the Middle East keep safe haven demand strong.
• The precious metal is struggling to find direction amid a delay in the Israeli military troops’ ground assault plan. Market participants anticipate that Israeli troops are preparing as much as possible ahead of the ground attack on Gaza by dismantling Palestinian military positions.
• Meanwhile, the US has been urging Israel to delay a widely anticipated ground assault, thereby allowing more time for the release of hostages and the delivery of humanitarian aid to civilians.
• Long-term bond yields have eased from multi-year highs of 5.02% as investors remain cautious on a host of U.S. economic indicators.
• US 10-year Treasury yields have fallen to 4.81%, as Federal Reserve policymakers continue to support the idea of ​​not raising interest rates further as rising yields are systematically affecting financial conditions .
• Fed officials said high bond yields have given the central bank time to evaluate the impact of interest rate hikes made so far.
• For more clarity on the Fed’s outlook on interest rates, investors await Fed Chair Jerome Powell’s speech scheduled for Wednesday.
• Last week, Jerome Powell kept hopes alive for further tightening of monetary policy if the US economy continues to hold up. He acknowledged that demand for labor has been buoyant and that consumer spending has remained strong despite significant efforts to ease inflation by raising interest rates.
• As for the outlook for interest rates, Powell said further policy tightening would largely depend on economic indicators, evolving outlooks and geopolitical tensions.
• Third quarter GDP, durable goods orders and the underlying September Personal Consumption Expenditure (PCE) price index will be released this week.
• Economists expect the US economy to have grown an annualized 4.2%, doubling the 2.1% growth rate of the previous reading.
• Ahead of the US GDP data, investors will focus on preliminary October PMI data from S&P Global, due at 13:45 GMT. According to estimates, the Manufacturing PMI fell to 49.5 compared to 49.8 in September. For its part, the services PMI would be slightly below the 50.0 threshold, at 49.9, compared to the previous publication of 50.1.
• US factory activity is expected to remain in contraction for the twelfth consecutive month.
• The DXY Dollar Index falls sharply to near 105.50 as the Fed is expected to keep interest rates unchanged in the 5.25%-5.50% range at the November policy meeting.
• According to the CME’s Fedwatch tool, traders see the Fed almost certain to keep interest rates unchanged at 5.25%-5.50%. The odds of one more interest rate hike at either of the two remaining monetary policy meetings in 2023 remain around 24%.

Technical Analysis: Gold Price Falls Below $1,970

Gold price shows a contraction in volatility near $1,980 ahead of crucial US economic data. The precious metal is moving sideways after failing to extend the rally above the psychological resistance barrier of the $2,000. The 20-day and 50-day exponential moving averages (EMA) have shown a bullish crossover above the 200-day EMA, justifying further upside.