Gold price drops to one-week low, downside seems limited amid US election uncertainty

• Gold price slides to a one-week low amid some repositioning trades ahead of the US election.
• Fed rate cut bets, falling US bond yields and subdued USD demand could lend some support.
• Middle East tensions might further contribute to limiting losses for the safe-haven XAU/USD.

Gold price (XAU/USD) attracts fresh sellers during the Asian session on Tuesday and drops to over a one-week low, around the $2,725-2,724 region, though the downside seems cushioned. The uncertainty surrounding the closely contested US presidential election, along with the risk of a further escalation of geopolitical tensions in the Middle East, might continue to offer support to the safe-haven precious metal.

Meanwhile, the unwinding of the “Trump trade” and bets the Federal Reserve (Fed) will lower interest rates further amid signs of a cooling US labor market lead to a further decline in the US Treasury bond yields. This fails to assist the US Dollar (USD) to build on the overnight bounce from a two-week low and should further contribute to limiting any meaningful depreciating move for the non-yielding Gold price.