Gold prices remained stable on Monday as investors watched key events in the United States, including the presidential election and the Federal Reserve's choice on interest rates. Spot gold went up 0.1% to $2,739.25 per ounce close to last Thursday's record high of $2,790.15, while U.S. gold futures showed a similar small increase hitting $2,752.20. The valuable metal has seen a big jump this year going up 33% as it keeps acting as a safe place to invest during times when the economy and politics are uncertain.
U.S. Election: A Key Factor for Gold Prices
Tuesday's U.S. presidential election has a major impact on gold this week. Polls show a tight race between Democratic nominee Kamala Harris and Republican incumbent Donald Trump. This keeps investors nervous. They know the result will affect global markets gold.
Gold often does well when politics get shaky. If the election is close or disputed, markets might get jumpy, and investors could turn to gold to play it safe. If Trump wins, gold might hit $2,900 an ounce. This could happen because he might spend more and cause prices to rise, which helps gold. On the flip side, if Harris wins, gold might drop a bit at first. Markets might think things will be more stable so fewer investors might want gold as a safety net right away.
Federal Reserve's Impact: A Rate Cut Is Almost Certain
Adding to the market buzz this week is the Federal Reserve's upcoming decision on interest rates and Chair Jerome Powell's remarks set for Thursday. The CME Fed Watch tool shows that markets expect a quarter-point rate cut with almost 100% certainty. The Fed has already shown a softer approach, and many investors think this trend will continue to prop up the economy.
Even though low interest rates give gold a boost by cutting the opportunity cost of holding assets that don't yield returns, the Fed's choice might not have a big effect on gold prices. Instead, the market thinks the Fed's approach will point to more cuts if the economy needs them. Still, the Fed's soft approach looks good for gold in the long run. With rates likely to stay low, gold becomes more appealing as a way to store value as investors look for options besides low-yield bonds and other fixed-income investments.
The Dollar Index and Gold: They Move in Opposite Directions
The U.S. dollar index plays a big role in gold's value. It dropped 0.5% to its lowest point in two weeks. Gold prices go up when the dollar gets weaker because it costs less for investors using other money. This week has lots of big things happening, and how the dollar moves could tell us where gold might go soon.
Gold prices might jump more if election results or Fed news make the dollar weaker. But if the dollar gets stronger—maybe because investors want it to stay safe if there's trouble after the election—gold could have some problems. The way the dollar and gold work together isn't simple, but usually when the dollar is weaker, gold looks better to buyers around the world.
Global Stimulus Measures: Gold's Outlook Looks Bright
From November 4-8, China's Standing Committee of the National People's Congress will meet. Investors think they'll announce more ways to boost the economy. Since China buys more metal than any other country new spending plans could make more investors want precious metals, gold included. As countries keep putting money into their economies to fight off COVID-19's impact, many still see gold as a good way to protect their money if prices go up.
Investors like gold more as a safety net as governments around the world try to prop up their economies with spending and money policies. This ongoing push to stimulate the economy might make currencies worth less and prices go up so gold becomes attractive to keep wealth safe over time.
Silver and Other Precious Metals
Along with gold silver prices climbed 0.7% to $32.65 an ounce after touching a two-week low earlier. Silver viewed as both a precious and industrial metal, gains from similar factors as gold such as low interest rates and a weaker dollar. However silver reacts more to economic growth due to its industrial applications. If additional global stimulus boosts economic activity, silver might experience larger increases alongside gold.
Price Action
For now, the path of the least resistance is skewed to the upside and small risk to the downside. The major important points are mentioned on the chart below.
Gold Chart by Exness
To wrap up: Gold's Future Path
As investors eye a week full of big events, the steady price of gold reflects the market's careful mood. The outcome of the U.S. presidential election could spark big price shifts. If Trump wins, gold might climb to $2,900 an ounce. On the other hand, a Harris win might cause a short-term drop as markets adjust to her budget plans.
At the same time, the Federal Reserve will cut rates, which will keep supporting gold prices by holding real interest rates down. This, along with a weaker dollar and ongoing global stimulus efforts, puts gold in a good spot to keep climbing over time.
To wrap up, gold still attracts investors who want to protect themselves from economic and political turmoil. With a heated election, a supportive Fed, and good global conditions, gold will keep its safe-haven role through 2024. Its chances of reaching new highs depend on changing political situations and how committed the Fed stays to very low rates.