Gold prices were flat on Monday ahead of the highly anticipated outcome of the US Presidential election and an upcoming policy meeting of the US Federal Reserve. 

However, prices of the yellow metal are expected to dominate and maintain its upswing even after the election outcome, according to experts.

Prices were in the green earlier in the session buoyed by a weaker dollar against a basket of major currencies.

A weaker dollar makes commodities priced in the greenback cheaper for overseas buyers, lifting demand. 

Among other precious metals, silver and platinum rose 0.5% and 0.4% on Monday, respectively. 

Copper futures were also higher as traders waited for a meeting of China’s National People’s Congress where the government is expected to outline further fiscal spending to boost the economy. 

Gold remains strong ahead of US election

Gold prices have been hovering around their record high touched last week. 

Dhwani Mehta, senior analyst at Fxstreet, said in a report:

All eyes now remain on the US presidential election due on Tuesday and the Fed outcome on Thursday, representing a pivotal week that will determine the value of the US Dollar and the Gold price in the months ahead. 

Polls showed that former President Donald Trump and Vice President Kamala Harris are locked in a tight battle. 

“Investment demand in the fourth quarter could be heavily influenced by the outcome of the US elections,” Carsten Fritsch, commodity analyst at Commerzbank AG, said in a report.

Moreover, markets believe that Trump’s policies on immigration, tax cuts and tariffs would put upward pressure on inflation, bonds and the dollar. 

In contrast, if Harris wins the election, a status quo is expected in terms of policy and decision-making in the US. 

Key economic data

Data released on Friday showed that the US non-farm payrolls increased by just 12,000 last month. This was below the analysts’ expectations of a rise of 106,000. 

The unemployment rate in the US also held steady at 4.1% in October. 

However, annual wage inflation, as measured by the change in the Average Hourly Earnings, rose to 4% from 3.9%, offsetting the weak non-farm payroll data. 

Mehta noted:

Markets shrugged off the weak NFP (non-farm payrolls) print, as it was largely expected to be distorted by severe hurricanes and a major strike at Boeing. 

At the time of writing, the December gold contract on COMEX was largely flat at $2,745.10 per ounce. 

Gold price outlook

The spot gold price has support around the $2,730 per ounce mark.

“Gold buyers need to reclaim the $2,746 resistance on a daily closing basis to resume its uptrend,” Fxstreet’s Mehta said. 

The next bullish target for gold prices is to claim the $2,800 per ounce once again.

The December gold contract had hit a lifetime high of $2,801 per ounce last week. 

On the downside, prices have support near $2,730 per ounce, followed by $2,718 per ounce. 

“Acceptance below that level on a daily candlestick closing basis could challenge the $2,700 confluence zone,” Mehta said. 

(Click on image to enlarge)

Source: Commerzbank Research

Prices have been largely resilient despite scaling back of expectations of a larger interest rate cut by the Federal Reserve.

Traders have priced in nearly a 100% probability of the US central bank cutting rates by 25 basis points at its meeting later this week.

In its September meeting, the Fed had cut rates by 50 bps, surprising most in the market.

Copper and silver rise

Copper prices on the London Metal Exchange (LME) rose sharply on Monday on expectations of further economic stimulus from China. 

The Asian giant is the world’s top consumer of copper. 

This week’s meeting of China’s National People’s Congress is likely to give further direction to copper prices. 

“We remain convinced that the fiscal package, which is likely to be finalised in the coming week, is not aimed at re-accelerating growth in China, but at stabilising it,” Volkmar Baur, FX analyst at Commerzbank, said. 

In this sense, it does reduce the risk of downside scenarios for base metals, and thus supports prices. However, it is unlikely to lead to lasting euphoria.

At the time of writing, the three-month copper contract on LME was $9,685 per ton, up 1.4% from the previous close. 

Meanwhile, silver on COMEX continued its recent upside in prices.

Prices remain near its 12-year high as optimism over rate cuts and increasing safe-haven demand keep traders interested in the metal. 

The December silver contract on COMEX was at $32.807 per ounce, up 0.4% from the previous close. 

More By This Author: