Sunday, December 22, 2024

Gold Steady as Results From Pivotal US Election Start to Roll In

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(Bloomberg) — Gold was steady as investors monitored a tight US election that could prove massively consequential for financial markets.

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Bullion was near $2,745 an ounce as a gauge of the dollar rose. Given the closeness of the race between Democrat Kamala Harris and Republican Donald Trump, it’s possible a final result may not be known for days or even longer, with the uncertainty potentially benefiting the precious metal.

With polls closed in more than two-thirds of states, Trump had taken preliminary leads in Georgia and North Carolina, two key swing states, while vote counting in others was in its early stages.

Some investors in recent weeks have bet heavily on a Trump victory. Trades tied to his pro-growth agenda have buoyed the dollar, which would typically dent gold’s appeal by making it more expensive for buyers using other currencies. However, nervousness over steep trade tariffs that Trump is pledging may also see investors flock to havens like bullion if he wins.

“A Republican sweep could fuel concerns about excessive government spending, pushing the debt-to-GDP ratio higher and likely bringing more hedging demand for gold,” said Charu Chanana, a strategist at Saxo Capital Markets Pte.

In the short-term, a victory for Harris would likely lead to an initial brief selloff in gold, Deutsche Bank AG analyst Michael Hsueh said in a recent note. A slide in the dollar resulting from a Harris win could boost demand for the precious metal in China and India, while prospects for slower growth may spur a faster pace of US interest-rate cuts.

Gold has surged more than 30% this year in a record-setting run that’s been powered by heightened geopolitical and economic risks, driving purchases by central banks and consumers alike. The rally has intensified in the last few months as the Fed pivoted to rate cuts and the US election loomed, helping bullion to shrug off traditional headwinds like rising Treasury yields.

Meanwhile, gold will benefit should the result of the vote be uncertain for days or even weeks, Commerzbank AG said in a note by analysts including Carsten Fritsch. The election has overshadowed the Federal Reserve’s rate decision on Thursday, where a 25-basis point has already been priced in, and is therefore unlikely to impact bullion, they added.

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