With a fall, gold “responds” to the first results of the elections in the United States, according to which Donald Trump has a lead over Vice President Kamala Harris.
In particular, gold traded near $2,735 an ounce as the dollar index rose, making the precious metal more expensive for many buyers. Republican nominee Donald Trump has taken an early lead in the Electoral College over Democrat Harris.
Given the closeness of the match, it’s possible that a final outcome won’t be known for days or more, with the uncertainty possibly benefiting the precious metal.
Some investors have bet heavily on a Trump victory in recent weeks. Trades linked to his pro-growth agenda strengthened the dollar, which typically reduces the appeal of gold by making it more expensive for buyers using other currencies. But jitters about Trump’s promised steep trade tariffs may also send investors flocking to safe havens like the precious metal.
Gold retains its luster
“A Republican sweep could fuel concerns about excessive government spending, pushing the debt-to-GDP ratio higher and likely bringing more offsetting demand for gold,” Charu Chanana, strategist at Saxo Capital Markets Pte., told Bloomberg.
In the short term, a win for Harris would likely lead to an initial short sell in gold, Deutsche Bank AG analyst Michael Hsueh said in a recent note. A slide in the dollar as a result of a Harris victory could boost demand for the precious metal in China and India, while the prospect of slower growth could spur a faster rate cut in the US.
Gold has risen more than 30% this year in a record run fueled by heightened geopolitical and economic risks, driven by both central banks and consumers. The rally intensified in recent months as the Fed moved toward rate cuts and the US election loomed.
Meanwhile, gold will benefit if the outcome of the vote is uncertain for days or even weeks, Commerzbank AG said in a note to analysts including Carsten Fritsch. The election overshadows the Federal Reserve’s rate decision on Thursday, where a 25bp hike has already been priced in. and therefore unlikely to affect gold, they added.
Spot gold was down 0.3% at $2,734.86 an ounce. The Bloomberg Dollar Spot Index rose 1.4%. Silver, platinum and palladium move down.
Source OT
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