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Gold edges up as U.S. election, Fed policy meeting stir jitters

CNBC/Reuters | 05/11/2024

Gold prices were steady on Monday, as U.S. election uncertainty loomed with markets pricing in chances of a contested result and political tensions, while investors also kept a close tab on the Federal Reserve policy meeting later this week.

 

Spot gold was up just 0.05% at $2,736.49 per ounce, having hit a record high of $2,790.15 last Thursday.

U.S. gold futures settled 0.08% lower at $2,746.90.

The U.S. presidential election is on Tuesday, with opinion polls showing Democratic candidate Kamala Harris and Republican Donald Trump neck and neck in the race to the White House.

A Reuters/Ipsos poll conducted last month found worries that the U.S. could see a repeat of the unrest that followed Trump’s 2020 election defeat, when his false claim that his loss was the result of fraud prompted hundreds to storm the U.S. Capitol.

“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,” said Bart Melek, head of commodity strategies at TD Securities.

Also on the radar this week is the Fed’s interest rate decision on Thursday, with markets widely anticipating a quarter-point cut.

Gold is seen as a hedge against economic and political uncertainty and tends to thrive when interest rates are low.

“I guess the driver for gold this week will be U.S. 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,” said UBS analyst Giovanni Staunovo.

The dollar index was down 0.4%, hitting a two-week low. A weaker U.S. currency makes dollar-priced gold more appealing for buyers holding other currencies.

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