Gold prices fell slightly as traders weighed the decision of US President Biden to withdraw from the re-election campaign and what that meant for the chances of Trump returning to the White House.
It is learned from the WiseMoney app that gold prices have dropped slightly as traders weigh the decision of US President Biden to withdraw from the re-election campaign and what that means for the chances of Trump returning to the White House.
According to data, as of Tuesday's press time, spot gold was slightly lower than $2,400 per ounce, wiping out Monday's earlier gains. The US dollar spot index fell 0.1%, while the yield on the US 10-year treasury note rose slightly. Silver and platinum fell, while palladium rose.
Earlier, Biden said he would complete his term and support Vice President Harris to replace him as a candidate, but she still needs to be formally nominated at the Democratic National Convention next month.
Daniel Ghali, chief of commodity strategy at TD Securities, said the new uncertainty was boosting gold's safe-haven appeal, while a reversal of Trump's trade could unleash more selling activity.
Meanwhile, traders are also weighing up signs of exhaustion in Asian buying, a key pillar in the first half of this year's gold rally. Since the end of last year, the premium of the Shanghai Gold Exchange over the London Gold Exchange has turned to a discount, indicating a decline in demand in this Asian country.
Ghali said in a report that this, coupled with the closing of positions on the Shanghai Futures Exchange, indicated that the 'downward window' for gold had opened.
Gold has risen more than 15% this year, hitting a historical high last week. Expectations of a Fed rate cut, strong buying by major central banks, and demand for safe-haven assets during continued geopolitical tensions have all supported gold prices.
Since Biden announced his withdrawal from the race, Trump's chances of winning the US election have declined slightly, but he still leads the pack.
If Trump wins the election, his administration may unleash the bullish and bearish power of gold. For example, the possibility of tax cuts and tariffs may push up inflation, forcing the Fed to raise interest rates more than it would in other situations. Higher rates are usually not favorable for non-interest-bearing gold. But Trump has also hinted at a preference for a weaker dollar, which could be beneficial for dollar-denominated commodities (including gold).
On the last trading day, exchange-traded funds (ETFs) added 87,612 ounces of gold, the fourth consecutive week of increasing total holdings, the longest record of continuous increase since November last year. According to data from the US Commodity Futures Trading Commission, the net long position of gold futures for fund managers recently reached its highest level since the beginning of 2020.