Gold prices declined on Tuesday as investors remained cautious ahead of the U.S. presidential election and the Federal Reserve policy meeting later this week.
In the UAE, gold rates declined AED1 with 24-carat gold falling to AED331 and 22-carat gold inching down to AED306.50. In addition, 21-carat declined to AED296.75 while 18-carat gold reached AED254.50.
Globally, spot gold fell 0.21 percent to $2,732.03 per ounce, as of 6:08 GMT, after hitting a record high of $2,790.15 last week, while December gold futures fell 0.15 percent to $2,741.95 per ounce.
U.S. presidential elections
Democratic candidate Kamala Harris and Republican candidate Donald Trump are in a very tight race in opinion polls, leaving the outcome of the U.S. presidential race uncertain and potentially unconfirmed for days after voting ends today. The focus remains on the seven battleground states that are likely to determine the course of the election.
Analysts expect gold prices to rise if any of the two candidates win as both are keen on raising spending. Therefore, gold prices may fluctuate in the short-term, but reach the $3,000 target by 2025, particularly amid ongoing government spending.
According to RealClear Polling, Trump is currently leading Harris in the presidential race, with the averages of Trump and Harris at 48.5 and 47.7 percent, respectively.
Gold witnessed some profit-taking last week, especially after data showed signs of resilience in the U.S. economy, eliminating bets on a larger interest rate cut by the Federal Reserve. However, the yellow metal remained close to its record highs in October, signaling that any increase in political uncertainty will likely drive safe-haven demand and further support prices.
Fed’s interest rate decision
Market attention this week will also be on the Federal Reserve’s interest rate decision due on Thursday, along with remarks from chair Jerome Powell and other officials. According to the CME FedWatch tool, markets see a 25-basis-point cut this week, which would be the second U.S. rate reduction of the year.
Despite markets largely expecting the quarter-point cut this week, gold prices may still see a reaction to the decision. However, markets will focus on policymakers’ future outlook and comments, especially as recent data showed strength in the U.S. economy and sticky inflation.
However, nonfarm payrolls data from Friday also showed some cooling in the labor market, a trend that gives the Fed more reason to keep cutting rates.
Gold, which is considered a hedge against geopolitical uncertainties, tends to rise in appeal when interest rates are low. Gold and other metal prices witnessed downward movement due to some resilience in the U.S. dollar, as the greenback steadied from recent losses.
In China, a major metals consumer, the Standing Committee of the National People’s Congress is meeting from November 4 to 8, with widespread market anticipation for the approval of additional fiscal stimulus measures. China’s services activity expanded at the fastest pace in three months in October, helped by early signs that Beijing’s big stimulus push was improving business conditions, the Caixin S&P Global services PMI survey showed.
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Other precious metals
Amid the decline in gold prices, the precious metals market saw mixed momentum with spot silver rising 0.01 percent to $32.46 per ounce and platinum declining 0.12 percent to $982.61. Meanwhile, palladium gained 0.37 percent to $1,078.49.
Despite uncertain market conditions, copper held steady at $4.40, buoyed by anticipation of additional stimulus in top copper importer China, as the National People’s Committee kicked off a four-day meeting on Monday.
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