Gold Prices Rise Slightly Amid Political Uncertainty

Gold prices rose slightly in Asian trade on Monday, driven by safe haven demand after U.S. President Joe Biden dropped his reelection bid and endorsed Vice President Kamala Harris to run in his stead.

The yellow metal saw a recovery from last week’s record highs, aided by rising speculation about a potential second Donald Trump presidency, which has heightened inflation expectations.

Spot gold increased by 0.2% to $2,405.02 an ounce, while August gold futures fell by 0.3% to $2,406.50 an ounce as of 00:53 ET (04:53 GMT).

Gold Sees Some Safe Haven Demand Amid Political Uncertainty

Gold prices remained close to the record highs achieved last week when spot prices reached $2,475.02 an ounce, as bets grew that the Federal Reserve would cut interest rates in September.

Political uncertainty surrounding the U.S. elections heightened safe haven demand for bullion, especially following Biden’s announcement over the weekend.

Though endorsed by Biden and most top Democrats, VP Harris must still be officially nominated as the presidential candidate at the party convention in August.

Last week, Trump emerged as the Republican frontrunner. CBS polling suggested he had a slight advantage over both Biden and Harris.

Analysts indicated that a Trump presidency might lead to increased long-term inflation, particularly if protectionist trade policies are enacted.

Biden’s announcement stirred uncertainty regarding the election outcome, as many top Democrats backed Harris’s nomination. Donor contributions to the Democratic party surged past $50 million following the news.

The dollar weakened slightly, providing some relief to metal markets.

Meanwhile, other precious metals were muted, with platinum futures declining by 0.1% to $972.80 an ounce, and silver futures stabilizing around $29.288 an ounce.

Copper Prices Drop, See Little Cheer from China Rate Cut

In industrial metals, copper prices dropped on Monday, continuing significant losses from last week amidst ongoing concerns over China’s economy.

Benchmark copper futures on the London Metal Exchange hovered around $9,306.50 a ton, while one-month copper futures fell by 0.2% to $4.2283 a pound.

The People’s Bank of China unexpectedly cut its benchmark loan prime rate to further loosen monetary policy and bolster economic growth.

However, ANZ analysts stated that this rate cut may not suffice, suggesting further reductions could occur if China’s economic growth remains weak. Economic sentiment in China has already been constrained by numerous disappointing economic indicators.