- As the US election approaches, precious metals prices are witnessing upward momentum, driven by investor uncertainty and anticipation of market volatility.
- Gold, silver and copper have all been trading higher since yesterday, with experts suggesting that the election outcome could significantly impact gold prices, while silver and copper benefit from broader market trends.
- The gold price index is poised for volatility as the election results approach, with expectations that uncertainty surrounding the outcome will provide support for the yellow metal.
However, the victory of Vice President Kamala Harris could dampen this momentum. Opinion polls indicate a tight race between Harris and former President Donald Trump, increasing speculation among investors. In this regard, Carsten Fritsch, commodity analyst at Commerzbank AG, pointed to Trump’s tightening lead in betting markets, indicating a more competitive environment as Election Day advances. The analyst explained that “a Trump victory could put upward inflationary pressure on the US economy, which usually bodes well for gold.”
He added that there are concerns about the potential questioning of the independence of the US Federal Reserve under the Trump administration, which complicates the Fed’s ability to effectively manage inflation. In contrast, the analyst warned that a Harris victory could put downward pressure on gold prices.
However, if the election results remain uncertain for a long time, the gold market could benefit from the uncertainty prevailing in the market.
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The Fed’s decision affects market dynamics
The upcoming policy meeting of the US central bank this week will also have a significant impact on precious metal prices. Analysts expect the Fed to cut US interest rates by 25 basis points, following a larger 50 basis point cut in September. Historically, low interest rates make non-yielding assets such as gold more attractive, leading to increased buying interest. In addition, Fed Chairman Jerome Powell is likely to hint at the possibility of further rate cuts in his upcoming press conference, so we do not expect any major surprises from the meeting.
Gold Price Analysis and Forecast Today:
With the December gold contract currently trading above its immediate resistance at $2,745 per ounce, prices appear to be on an upward trajectory once again. The next target for this contract is the recent record high of $2,801 per ounce, which was reached last week. Conversely, a sustained decline below $2,730 could expose the 38.2% Fibonacci support level at $2,718. At the same time, further declines could see a test of the 61.8% Fibonacci support at $2,673.
Silver and Copper Prices Rise
Also, Comex silver prices are trending higher as traders await the election results. As an industrial metal, silver’s value is also influenced by developments in China, especially the ongoing four-day meeting of the National People’s Congress. At the time of writing, COMEX silver futures were trading at $32.722 per ounce, up 0.3% from the previous close. According to Commerzbank, details of the potential fiscal package from China are still undisclosed. However, rumours suggest it could be worth around 10 trillion yuan, equivalent to around 7.7% of China’s GDP over the past year. This expected fiscal stimulus is also favourable for copper, as China is a major consumer of the metal.
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