Gold Remains Above $2,600 Per Ounce as Markets Await Any Military Response in the Middle East

- Spot Gold price continues to maintain its upward momentum above $2,600 per ounce, moving within a familiar trading range that has persisted over the past week.

- The positive U.S. jobs report released on Friday provided further evidence of a still resilient labor market, forcing investors to scale back bets on a significant interest rate cut by the Federal Reserve in November. This scenario keeps the U.S. dollar steady near a seven-week high and acts as a headwind for the non-yielding yellow metal. The upbeat U.S. jobs report for September prompts traders to reduce bets on a more aggressive policy easing from the Federal Reserve, weakening the gold price.

- According to CME's FedWatch tool, market participants are currently pricing in an 85% chance of a 25 basis point rate cut at the next monetary policy meeting in November.

- Ongoing geopolitical risks stemming from the current conflicts in the Middle East help limit the decline in gold's price as a haven. Furthermore, traders may prefer to stay on the sidelines ahead of the release of the September FOMC meeting minutes. Additionally, the U.S. Consumer Price Index and Producer Price Index will influence the U.S. dollar and provide some momentum for gold against the dollar.

- The yield on the benchmark 10-year U.S. government bond has moved above the 4% threshold for the first time in two months, while the U.S. dollar has moved away from its seven-week high.

- Neel Kashkari, President of the Minneapolis Fed, indicated that the overall balance of risks has now shifted away from high inflation toward a potential increase in unemployment. Meanwhile, Alberto Musalem, President of the St. Louis Fed, stated that he supports additional interest rate cuts and that economic performance will determine the path of monetary policy.

- Investors remain concerned that tensions in the Middle East could escalate into a wider conflict, which might act as a tailwind for gold's price as a haven and help limit deeper losses.

In a separate context, the National Development and Reform Commission of China stated that negative pressures on China's economy are increasing.

What Are the Predictions for Gold Movements?

- From a technical perspective, gold is maintaining its movements above $2,600 per ounce, with support levels at $2,625 and $2,610. As long as the $2,600 support level holds, gold targets a re-test of the $2,650 and $2,660 levels. In the event of any military response in the Middle East, this could serve as a new catalyst for bulls and set the stage for an extension of a well-established upward trend lasting several months, potentially reaching $2,700 per ounce and then $2,720 per ounce.

- If gold fails to hold the $2,600 support level, a violent corrective wave may begin, potentially pushing the price down to $2,550 per ounce.

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