After gold prices rallied to new highs, traders took profits

On October 31st, after the price of gold rose to a new high, some traders took profits, causing gold prices to fall back. The price of gold fell as much as 2% to a low of $2,731. This follows the release of strong economic data in the United States, which increases the possibility that the Federal Reserve will cautiously cut interest rates in the coming months. In addition, PCE data showed that headline inflation was at an annual rate of 2.1%, the lowest level since the beginning of 2021 and just above the central bank's 2% target. Before today's decline, gold prices had surged by more than a third this year, boosted by central bank buying and safe-haven demand triggered by conflicts in the Middle East and Ukraine. The recent rally has lifted gold's 14-day relative strength index above 70, a level that could suggest the market is overbought. The US presidential race has also brought uncertainty, underlining gold's role as a safe-haven asset. Ole Hansen, head of commodity strategy at Saxo Bank, said the November 5 election could lead to a correction of more than $100.