As the US election approaches, the prices of precious metals are experiencing upward momentum, driven by investor uncertainty and anticipation of volatility in the market.
On Tuesday, gold, silver, and copper are all trading higher, with experts suggesting that the election outcome could significantly impact gold prices, while silver and copper benefit from broader market trends.
Gold prices are poised for volatility as the election results loom, with expectations that the uncertainty surrounding the outcome will provide support for the yellow metal.
However, a victory for Vice President Kamala Harris may reduce this momentum. Polls indicate a closely contested race between Harris and former President Donald Trump, heightening speculation among investors.
Carsten Fritsch, a commodity analyst at Commerzbank AG, noted the tightening of Trump’s lead in betting markets, suggesting a more competitive environment as election day progresses.
“A win for Trump could put upward inflationary pressure on the US economy, which typically bodes well for gold,” Fritsch explained.
He added that there are concerns about the potential questioning of the US Federal Reserve’s independence under a Trump administration, complicating the Fed’s ability to manage inflation effectively.
In contrast, Fritsch cautioned that a Harris victory could exert downward pressure on gold prices.
If the election results remain uncertain for an extended period, however, gold may still gain from the ensuing market uncertainty.
Fed’s policy decision influences market dynamics
This week’s upcoming policy meeting of the US central bank will also significantly influence precious metal prices.
Analysts expect the Federal Reserve to cut interest rates by 25 basis points, following a larger cut of 50 basis points in September.
Historically, lower interest rates make non-yielding assets like gold more attractive, leading to increased buying interest.
“In addition, Fed Chairman Jerome Powell is likely to signal the possibility of further rate cuts in the upcoming press conference,” Commerzbank AG stated.
“No major surprises are anticipated from the meeting.”
Gold price forecasts
With the December gold contract currently trading above its immediate resistance level of $2,745 per ounce, prices appear to be on an upward trajectory again.
The next target for this contract is its recent record high of $2,801 per ounce, reached last week.
“Conversely, a sustained decline below $2,730 could expose the 38.2% Fibonacci support level at $2,718,” said Dhwani Mehta, an analyst at FxStreet.
She further noted that additional declines could lead to testing the 61.8% Fibonacci support at $2,673.
Silver and copper prices rise
Silver prices on COMEX are also trending upward as traders await the election results.
As an industrial metal, silver’s value is further influenced by developments in China, particularly the ongoing four-day meeting of the National People’s Congress.
At the time of writing, silver futures on COMEX were priced at $32.722 per ounce, up 0.3% from the previous close.
According to Commerzbank, details regarding a potential fiscal package from China remain undisclosed, but rumors suggest it could be valued at around CNY 10 trillion, equivalent to approximately 7.7% of China’s GDP over the past year.
This anticipated fiscal stimulus is also favorable for copper, given that China is a leading consumer of the metal.
As of now, the three-month copper contract on the London Metal Exchange is trading at $9,729 per ton, reflecting a 0.5% increase from the previous close.
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