Many factors support gold price breakthrough

After 6 days of sell-off, the gold market seems to be finding its footing again as prices rise back above 2,600 USD/ounce.

Gold prices rose to a multi-session high after the latest U.S. housing construction data fell more than expected last month, according to Kitco.

The Commerce Department reported Tuesday that housing starts fell 3.1% in October to a seasonally adjusted annual rate of 1.311 million units. The data was worse than expected, with economists predicting a smaller decline to a seasonally adjusted annual rate of 1.330 million units.

The previous data in September recorded 1.354 million units. For the year, US housing construction activity decreased by 4% compared to activity in October 2023.

The report said future housing permits fell 0.6% to a rate of 1.416 million last month, also below expectations of 1.430 million. On the year, U.S. building permits issued were also down 7.7% from October 2023.

In addition to US economic data, geopolitical tensions tend to escalate in some regions, which is driving money flows into gold. The focus this time is the information that US President Joe Biden for the first time allows Ukraine to use long-range missiles provided by the US to attack Russian territory - according to the New York Times.

In response to this information, Russia has issued a stern warning to the US and its allies, stating that any use of long-range missiles by Ukraine to strike deep into Russian territory would mean that Western powers are directly involved in the conflict - according to Reuters.

Although the White House neither confirmed nor denied this information, the possibility of such a policy change has caused a strong reaction from Moscow.

The situation remains tense, with some Western leaders publicly admitting concerns about further escalation and the possibility of direct conflict between NATO and Russia.

With geopolitical tensions on the rise, Kitco senior analyst Jim Wyckoff said that safe-haven demand is increasing, driving buying of precious metals. Strong risk-off sentiment is benefiting gold prices.

Meanwhile, concerns about an escalation in the Russia-Ukraine war kept stocks under pressure in early trading on Tuesday, while gold prices edged higher and Bitcoin held steady, said Jordan Finneseth, an analyst at Kitco.

"Gold prices rose as the return of safe-haven appeal helped boost the precious metal," said Jordan Finneseth.

George Milling-Stanley, chief gold strategist at State Street Global Advisors, said that even after a long sell-off, the gold market remains in a solid uptrend and is still on track to end the year in his bullish scenario.

Earlier this summer, Milling-Stanley raised its year-end gold price forecast to between $2,500 and $2,700 an ounce.

“I was a little shocked by the severity of the gold sell-off, but I don’t think it’s sustainable. After seeing a 33% gain this year, I don’t think investors should be too worried about this sell-off,” he said.