Gold prices edged down on Monday as investors geared up for a major week for the global economy ahead of the U.S. presidential election and the likelihood of another interest rate cut by the Federal Reserve.
In the UAE, gold rates gained a marginal AED0.25 with 24-carat gold rising to AED331.75 and 22-carat gold inching up to AED307.25. In addition, 21-carat rose to AED297.50 while 18-carat gold reached AED255.
Globally, spot gold fell 0.28 percent to $2,740.3 per ounce, as of 6:06 GMT, after hitting a record high of $2,790.15 last week, while December gold futures fell 0.05 percent to $2,747.95 per ounce.
U.S. presidential election
Gold prices ticked down ahead of the U.S. presidential election on Tuesday, with opinion polls too close to call a winner between Democratic candidate Kamala Harris and Republican Donald Trump.
Uncertainty surrounding the election and the U.S. central bank’s policy decision could benefit gold prices this week. Delays in the election outcome or split control of the House and Senate might also drive safe-haven flows, pushing gold prices higher. Markets believe Trump’s policies on immigration, tax cuts, and tariffs would put upward pressure on inflation, bond yields, and the dollar while policy continuity is expected if Harris wins, further raising uncertainty for investors.
According to RealClear Polling, Trump is currently leading Harris in the presidential race, with the averages of Trump and Harris at 48.5 and 48.4 percent, respectively.
Fed rate cut
Following the presidential election, market attention will shift to the Federal Reserve’s interest rate cut decision on Thursday. The uncertainty over the U.S. election outcome is one reason markets expect the Fed to deliver a 25-basis-points rate cut on Thursday, rather than repeat its outsized half-point easing.
Further supporting gold prices, the U.S. dollar index dipped 0.58 percent on Monday, making bullion more attractive for other currency holders.
On Friday, gold prices extended their decline, as a disappointing headline U.S. nonfarm payrolls data was offset by hot wage inflation data. The U.S. Bureau of Labor Statistics’s report showed on Friday that NFP increased by 12,000 last month, the smallest gain since December 2020, following a downward revision to the prior two months.
Meanwhile, the unemployment rate held steady at 4.1 percent in October and annual wage inflation rose to 4 percent from 3.9 percent. Markets expected weaker nonfarm payrolls data due to severe hurricanes and a major strike at Boeing.
Currently, markets are pricing a 99.9 percent chance of a quarter-point rate cut this week, according to the CME FedWatch tool.
Elsewhere, China’s Standing Committee of the National People’s Congress meets from November 4-8, with markets widely expecting the approval of more fiscal stimulus measures.
Geopolitical risks persist
Geopolitical tensions in the Middle East have continued to escalate, creating an atmosphere of uncertainty and instability that could potentially spill over into a broader regional conflict. These rising tensions are fueling fears of further unrest across the region, prompting investors to seek safe-haven assets like gold to protect against potential economic fallout. Despite the recent decline, the increased demand for gold has provided a strong upward push to the precious metal’s prices, further reinforcing its appeal.
Other precious metals
Amid the decline in gold prices, the precious metals market saw positive momentum with spot silver rising 0.63 percent to $32.63 per ounce and platinum gaining 0.60 percent to $998.40. Palladium was also positive, surging 1.58 percent to $1,114.94.
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