Gold price rises to record high as US consumer confidence deteriorates

• Gold hits new ATH of $2,655 amid falling US consumer confidence and weaker US dollar, XAU/USD trades at $2,651.
• Fed Governor Michelle Bowman is signaling a cautious approach to interest rate cuts.
• Geopolitical tensions in the Middle East are also fueling haven demand for gold, driving the precious metal to new highs.

Gold prices hit a new all-time high (ATH) during the North American session on Tuesday due to a deterioration in consumer confidence in the United States (US), according to data provided by the Conference Board. This, along with a drop in US Treasury yields and the weakness of the US dollar, sponsored a move in the non-profitable metal. XAU/USD is trading at $2,651 after hitting an ATH of $2,655.

The Conference Board revealed that consumer confidence fell in September, hitting its lowest level since August 2021, due to growing concerns about the labor market and the overall economic outlook.

U.S. Treasury yields fell 3.73%, down two basis points, after the data. At the same time, the US dollar index (DXY), which measures the greenback’s performance against a basket of six currencies, fell to a two-day low of 100.48, down more than 0.42%.

Meanwhile, Fed Governor Michelle Bowman, a noted hawk, said risks to inflation remained significant, expressing her preference for “a measured pace of tapering” to prevent the risk of inflation rekindling.

Daily market reasons: Gold price extends gains on weak US data

• The CB consumer confidence index for September fell from 105.6 to 98.7, missing analysts’ estimate of 103.8.
• Dana Peterson, chief economist at the Conference Board, said: “The deterioration in the main components of the index likely reflected consumer concerns about the labor market and reactions to fewer hours, slower wage growth and fewer job openings.”
• Tensions in the Middle East escalated as Hezbollah called on Iran to launch an attack on Israel, according to Axios.
• US data on Monday showed Business Activity decelerating slightly but remaining resilient as S&P Global revealed the services PMI beat expectations. On the contrary, manufacturing activity deteriorated further.
• According to the World Gold Council, physically backed gold ETFs worldwide saw modest net inflows of 3 metric tons last week.
• Market participants are confident of at least a 25 bps rate cut by the Fed at the November meeting, while the odds of a 50 bps cut are 56.2 percent, according to the CME FedWatch Tool.

XAU/USD Technical Outlook: Gold is poised for further gains ahead of a pullback

XAU/USD is partially bullish, poised to print straight highs, even as the rally looks overextended, with traders eyeing the $2,700 mark. Momentum favors buyers even though the Relative Strength Index (RSI) has become overbought. Therefore, buyers should be aware that a recall could be on the cards.

If XAU/USD extends its rally, traders could test $2,675 followed by $2,700. The $2,750 level is next, followed by $2,800.

On the other hand, if XAU/USD breaks below $2,650, look for a test of the September 18 daily high at $2,600. The next key support levels to test will be the September 18 low at $2,546, followed by the 50-day Simple Moving Average (SMA) at $2,481.