Gold prices saw modest gains during Asian trading on Wednesday, influenced by a resurgent dollar amidst ongoing uncertainty surrounding the U.S. presidential election and the forthcoming Federal Reserve meeting.
Spot gold edged up by 0.3% to reach $2,416.72 per ounce, while August futures climbed 0.4% to $2,417.65 per ounce. Despite these gains, prices remained off recent record highs established over the past fortnight.
The increase in gold prices was tempered by a rebound in the dollar, driven by both safe-haven demand and positioning ahead of the upcoming Fed meeting. Traders maintained a cautious stance amid persistent ambiguity regarding the 2024 presidential race, particularly following President Joe Biden’s withdrawal from the contest and his endorsement of Vice President Kamala Harris as the Democratic nominee.
According to a Reuters/Ipsos poll, Harris currently holds a slight edge over Republican nominee Donald Trump following Biden’s endorsement, highlighting the evolving dynamics of the election.
Market participants also awaited cues from the Fed meeting, widely expected to maintain interest rates unchanged, with attention focused on potential rate cuts anticipated to commence in September.
Meanwhile, industrial metals, particularly copper, faced substantial declines amidst worsening sentiment concerning China, the world’s leading commodity importer. Benchmark copper futures on the London Metal Exchange dropped 0.4% to $9,132.50 per tonne, while one-month copper futures fell 0.6% to $4.1427 per pound, marking near four-month lows for both contracts.
The downturn in copper prices was precipitated by disappointing growth figures from China’s second quarter, exacerbating concerns over demand. The Third Plenum of the Chinese Communist Party yielded little indication of forthcoming stimulus measures from Beijing, compounded by an unexpected interest rate reduction earlier in the week that failed to meet market expectations.
Furthermore, apprehension regarding U.S. policy towards China under a new administration further clouded sentiment towards Chinese markets.
In tandem, other precious metals such as platinum and silver also retreated, reflecting their close ties to industrial metal performance.
The landscape remains uncertain as market participants navigate through a complex interplay of economic data, geopolitical developments, and impending monetary policy decisions, all of which continue to shape global commodity markets.
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