Gold, US Dollar, Bond Yield Technical Analysis Amid US Election Volatility

The US presidential election is causing significant uncertainty across financial markets. As the election begins, the US dollar (DXY) edges lower, nearly 103.70, and recovers higher. Investors are cautious and wait for clarity on the following economic policies. If Trump wins, the US dollar may experience an initial surge due to expectations of business-friendly measures. However, if Kamala Harris prevails, a temporary decline in the US dollar could occur, but many factors will depend on the monetary policy decision on Wednesday.

The Treasury yields are also experiencing volatility in anticipation of the election outcome. The 10-year Treasury note yield is hovering near four-month highs, around 4.3%. A Trump win could reinforce inflationary expectations, pushing yields higher as markets expect a more aggressive fiscal stance. Regardless of the election result, yields are expected to remain upward, with the Federal Reserve’s monetary policy being a key driver this week. The higher Treasury yields make US assets more attractive to investors, increasing demand for the US dollar. Traders monitor the Fed’s stance, especially if inflation pressures persist.

Moreover, gold (XAU) prices react to political and economic developments. The higher inflation expectations from a Trump victory could make gold an attractive hedge, boosting prices. On Tuesday, the ISM Services PMI came in strong at 56, exceeding expectations of 53.8, signalling economic resilience. However, the market is focused on the US election results. As the election unfolds, financial markets could experience strong volatility. The gold market may see price fluctuations before making its next move.

Gold (XAU) Technical Analysis

Gold Daily Chart – Consolidation Before US Election Outcome

The daily chart for gold shows price consolidation in the resistance area ahead of the outcome of the US election. The price hit the red-dotted trend line at $2,790 and began consolidating lower. The trend stays strongly upward if the price remains above the 50 SMA.

However, the recent correction from $2,790 was due to overbought conditions indicated by the RSI. The price continues to trade within the ascending broadening wedge pattern, with strong support at $2,690 and $2,569 in the spot gold market. The black dotted trendline on the daily chart highlights these support levels.

Gold 4-Hour Chart – Ascending Channel Pattern

The 4-hour chart shows a price correction from the ascending channel’s resistance at $2,790. The RSI indicates the price may drop further before short-term support is confirmed. The ascending channel’s support also validates the daily support at $2,690 on the daily chart.

US Dollar (DXY) Technical Analysis

US Dollar Daily Chart – Strong Fluctuations Ahead of US Election Outcome

The daily chart for the US dollar index shows that the index showed strong volatility around the resistance area before the US election outcome. The index broke below the 200 SMA on Tuesday but recovered higher on Wednesday. The US elections may create significant volatility as the outcome unfolds, leading to large swings in both directions. In case of a break above 104.70, the index could trade higher toward 105.60. Conversely, a break below 103.90 would indicate a drop toward 102.20.

US Dollar 4-hour Chart – Symmetrical Broadening Wedge

The 4-hour chart shows price movements within a symmetrical broadening wedge pattern. The index has been consolidating within this wedge for the past week. A break below 103.60 could push the index to lower levels. The RSI indicates that despite overbought conditions, the strong and consistent price rally in October may lead to a downward movement in November to compensate for the rally. If Trump wins, there could be a spike in the US Dollar toward the resistance level of 105.60 on the daily chart.

Treasury Yields Technical Analysis

10-Year Treasury Note Yield Daily Chart – Approaching Resistance within Channel

The US Treasury yield has consistently risen after the COVID-19 pandemic due to higher inflation expectations following economic recovery. However, from the last quarter of 2023 to October 2024, Treasury yields have fluctuated within a channel pattern. This channel is visible on the daily chart, with strong resistance at 4.47%, identified by the channel’s resistance line.

The daily chart also shows an overbought state, indicating that a price correction might occur if Treasury yields reach 4.47%. Conversely, a break above this level may signal continued upward momentum in Treasury yields. The monetary policy decision on November 7th will be the primary driver of Treasury yield movements.

10-Year Treasury Yield 4-Hour Chart – Ascending Channel

The 4-hour chart for the US Treasury yield shows it is approaching an overbought state and exhibiting bearish momentum. While trading within the ascending channel, the US Treasury yield may soon encounter resistance at 4.47%. A break above 4.47% could trigger another rally. The RSI indicator highlights the bearish divergence on the 4-hour chart, which indicates short-term correction.