Gold prices globally declined on Wednesday as investors keenly awaited the outcome of the U.S. presidential race and the Federal Reserve‘s rate cut decision this week.
In the UAE, gold rates remained steady with 24-carat gold at AED332 and 22-carat gold at AED307.50. In addition, 21-carat gold remained at AED297.75, and 18-carat gold held steady at AED255.25.
Globally, spot gold declined 0.16 percent to $2,735.88 per ounce, as of 6:10 GMT, after hitting a record high of $2,790.15 last week, while December gold futures fell 0.21 percent to $2,743.90 per ounce.
U.S. election
Gold prices declined as markets awaited the highly anticipated results of the U.S. presidential election. While the results are not out yet, Republican candidate Donald Trump currently holds 247 electoral votes or 51.1 percent of votes, leading over Democrat Kamala Harris, who currently has 210 or 47.4 percent of votes. A candidate needs a total of at least 270 votes in the state-by-state Electoral College to claim the presidency.
Trump defeated Harris in the battleground states of North Carolina and Georgia in Tuesday’s U.S. presidential election, Edison Research projected. This took him closer to completing a political comeback four years after he left the White House.
Analysts noted that gold prices may benefit from Trump’s win due to the potential impact of large deficit spending and potentially more uncertain U.S. foreign policy.
Global investors were increasingly pricing in a Trump win late on Tuesday. U.S. stock futures and the dollar rose, while Treasury yields climbed and Bitcoin recorded a new record high ahead of the election results. The U.S. dollar surged to a near four-month high in reaction to the U.S. election exit polls, which suggest that the vote is moving in favor of former President Donald Trump.
Rise in first-time gold buyers
Investors around the world exhibited a strong appetite for gold last month. The number of first-time gold buyers around the world doubled from its 12-month average – rising a whopping 104.2 percent. On a month-over-month basis, first-time gold buyers around the globe surged 49.4 percent in October, led by the UK, France, Germany, and Italy.
“However, what is surprising is the behavior of American voters. First-time buyers of bullion in America declined month-over-month in October, ahead of the election,” said Vijay Valecha, chief investment officer, Century Financial.
“It is not that Americans are shying away from gold. First-time bullion buyers remained 54.8 percent above the 12-month average in October 2024. However, on a month-over-month basis, the number was lower by 17.2 percent. Compared to its 13-month peak in May, the number declined 36.8 percent in October,” he said.
Valecha added that this could be an indication of political polarization.
“Voters are divided – and both Republican and Democrat supporters vehemently anticipate a decisive victory for their chosen candidate,” he said.
Fed’s rate cut meeting
Traders are also awaiting the Federal Reserve’s two-day policy meeting, which concludes on Thursday and chair Jerome Powell’s remarks for further direction. Markets broadly expect the Fed to make a 25-basis-point rate cut this week after the outsized September reduction. However, the Fed may avoid a dovish tone due to the inflationary impact of Trump’s policies.
Gold is traditionally considered a hedge against geopolitical and economic uncertainties and tends to thrive in a low-interest-rate environment. Gold and other metal prices witnessed downward movement due to some resilience in the U.S. dollar, as the greenback surged, making gold prices less attractive for other currency holders.
According to the CME FedWatch tool, markets see a 97.5 percent chance of 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.
Other precious metals
Amid the decline in gold prices, the precious metals market saw negative momentum with spot silver falling 1.30 percent to $32.23 per ounce and platinum declining 1.08 percent to $989.05. Meanwhile, palladium slipped 2.01 percent to $1,054.00.
Despite uncertain market conditions, copper held steady in previous sessions 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. However, amid uncertain market conditions, copper declined 0.39 percent to $4.43.
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