Gold, Oil Outlook: US Elections, FOMC, and Possible Domino Effects

Key Events

Republican win: positive market volatility?
Democratic win: stable / negative market volatility?
ISM Services PMI: expected to kickstart the week’s volatility
FOMC meeting (Thursday)

Analyzing market movements from a comparative perspective, a Republican win is generally expected to boost the dollar and markets more than a Democratic win. Similarly, a 25-bps rate cut is viewed as a positive easing decision compared to a larger 50-bps cut. With the following factors on the table, what are the possible effects on oil and gold?

This image will only appear on cityindex websites!

Gold Outlook

Gold’s rally, driven by inflation, geopolitical tensions, and overall market uncertainty, may be reaching a point of correction. Both monthly and daily charts reflect overstretched momentum, suggesting a possible pullback. With gold and indices hovering near 2024 highs, any trigger could initiate a domino effect, heightening volatility across global markets amid existing economic and political caution.

Quantifying uncertainties with technical analysis

Gold Outlook: Monthly Time Frame – Log Scale

Source: Tradingview

According to the broader chart view, gold may have reached a peak, with the RSI and price action meeting the target of an inverted head-and-shoulders pattern. This suggests a potential momentum recharge or pullback to the $2,680–$2,670 zone. If a deeper pullback occurs, additional support levels may emerge at $2,600, $2,540, and $2,480.

On the upside, a firm close above $2,800 could extend the rally toward $2,890 and $3,050.

This image will only appear on cityindex websites!

What about Oil?

Oil Outlook

Click here for the full: Crude Oil Election Outlook

Oil remains range-bound, just above the December 2021 support, as Middle East tensions and oil production quotas create a balancing act. The possibility of increased supply from OPEC and IEA’s forecasted demand drop are key factors, with OPEC’s recent hints at delaying production hikes helping to keep oil above the $64–$65 support range.

A breakout from the $72.30 resistance or $65 support level is needed to confirm the next directional move. A Trump victory may introduce a more aggressive approach to energy policies, impacting supply quotas, geopolitical stances, and OPEC relations, potentially raising volatility.

Quantifying uncertainties with technical analysis

Crude Oil Outlook: Weekly Time Frame

Source: Trading view

Removing all the fundamental noise, a firm close below $64 support would likely extend oil’s primary downtrend since 2022, with further drops towards $60, $58, and $49.

Conversely, a firm breakout above $72.30 can support the trend towards the upper border of the primary downtrend between resistance levels $80 and $84 before confirming a longer-term bull scenario.

--- Written by Razan Hilal, CMT on X: @Rh_waves

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.