Gold price holds steady around $2,735 area amid modest USD slide, US election jitters

• Gold price attracts dip-buyers after touching a one-week low on Tuesday and draws support from a combination of factors.
• Fed rate cut bets, declining US bond yields and subdued USD demand continue to act as a tailwind for the precious metal. 
• Middle East tensions further benefit the safe-haven XAU/USD and contribute to the modest intraday recovery move. 

Gold price (XAU/USD) reverses an intraday dip to over a one-week low and trades around the $2,735 area, nearly unchanged for the day heading into the European session on Tuesday. Safe-haven demand stemming from the closely contested US presidential election and the risk of a further escalation of geopolitical tensions in the Middle East offers some support to the precious metal.

Furthermore, the unwinding of the "Trump trade", along with bets the Federal Reserve (Fed) will lower interest rates further amid signs of a cooling US labor market, continue to drag the US Treasury bond yields lower. This, in turn, prompts fresh US Dollar selling and turns out to be another factor benefiting the non-yielding Gold price amid the cautious mood across the global equity markets.

The upside for the Gold price, however, remains capped as traders seem reluctant to place aggressive directional bets ahead of this week's key event risks – the US presidential election and the Federal Open Market Committee (FOMC) meeting. In the meantime, Tuesday's release of the US ISM Services PMI will be looked upon for short-term trading opportunities later during the North American session. 

Daily Digest Market Movers: Gold price traders seem non committed amid the US election uncertainty

• The recent opinion polls indicated that Democratic candidate Kamala Harris and Republican Donald Trump are locked in a tight race to the White House, fueling political uncertainty.
• The winning odds of former President Donald Trump have fallen significantly, prompting some unwinding of the "Trump Trade" and dragging the US Treasury bond yields lower.
• The yield on the benchmark 10-year US government bond and the two-year Treasury note registered their biggest one-day decline in two months and nearly three weeks, respectively.
• A part of the decline in the US bond yields could further be attributed to rising bets for more interest rate cuts by the Federal Reserve, bolstered by signs of a weakening US labor market. 
• Iran signaled that it would deliver a harsh response to Israel's late-October strikes on its territory, while the US directly warned Iran against launching another attack against its ally Israel. 
• Tuesday's US economic docket features the release of the ISM Services PMI later during the US session, although it might do little to provide any impetus ahead of the US presidential election. 

Technical Outlook: Gold price lacks firm intraday direction, $2,720-2,715  zone holds the key for bulls

From a technical perspective, last week's failure near the top boundary of an ascending channel extending from late July and the subsequent pullback from the all-time peak could be seen as a sign of bullish exhaustion. However, mixed oscillators on the daily chart warrant some caution before positioning for further losses. Hence, any further decline is more likely to find some support near the $2,720-2,715 horizontal zone, below which the Gold price could aim to challenge the trend-channel support, currently pegged near the $2,690 region. Some follow-through selling would mark a bearish breakdown and pave the way for some meaningful corrective fall in the near term.

On the flip side, the $2,748-2,750 area now seems to act as an immediate hurdle ahead of the $2,790 region, or the record high touched last Thursday. This is followed by the $2,800 round figure and the ascending channel resistance, around the $2,820 zone. A sustained strength beyond the latter will be seen as a fresh trigger for bullish traders and allow the Gold price to prolong its recent well-established uptrend.