On Monday, gold prices witnessed a slight upward movement. The looming uncertainty of the US election, with markets factoring in the potential for a contested result and existing political tensions, contributed to this. At the same time, investors were closely observing the Federal Reserve’s policy meeting scheduled for later in the week.
The US presidential election is set to occur on Tuesday. Opinion polls suggest that Democratic candidate Kamala Harris and Republican Donald Trump are in a tight race for the White House. A Reuters/Ipsos poll conducted last month unearthed concerns that the US could experience a recurrence of the unrest that followed Trump’s 2020 election defeat. Back then, his false claim that his loss was due to fraud led to hundreds storming the US Capitol.
Bart Melek, the head of commodity strategies at TD Securities, stated, “If Trump wins, I think, gold does well here. We’re probably worried a little bit more about inflation with all the tariffs that he’s talking about.”
This week, another significant event on the radar is the Fed’s interest rate decision on Thursday. Markets are widely anticipating a quarter-point cut. Gold is commonly regarded as a hedge against economic and political uncertainties and generally fares well when interest rates are low.
UBS analyst Giovanni Staunovo commented, “I guess the driver for gold this week will be US elections. The Fed cut is unlikely to trigger much movements in my view, as the bank is likely to signal further cuts in line with market expectations.”
The dollar index (.DXY) declined by 0.4%, reaching a two-week low. A weaker US currency makes dollar-priced gold more appealing to buyers who hold other currencies.
Gold’s Modest Uptick Amid US Election Uncertainty and Upcoming Fed Policy Meeting