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Gold prices continued to rise on Wednesday (24 July) due to the weakening of the U.S. dollar. As of 11:00 a.m. ET, spot gold was up 0.9% intraday at $2,430.66 per ounce, extending gains for the third consecutive session. Meanwhile, the U.S. dollar index fell 0.2 per cent and the U.S. Nasdaq, which is dominated by tech stocks, was also hit hard on Wednesday.
Jim Wyckoff, senior market analyst at Kitco Metals, said the weaker dollar index, falling U.S. stock indexes and rising crude oil prices have supported buying interest in gold and silver.
And according to a new report from the World Gold Council, geopolitical uncertainty is intensifying, which will continue to support safe-haven demand for gold as the election is less than four months away in the U.S. WGC analysts believe that precious metal prices could be well supported regardless of whether Trump or Harris is elected president.
Historically, US elections have not been seen as a geopolitical risk, but the US and the world remain highly polarised, highlighting the need for solid risk aversion in investor portfolios, and gold can play exactly that role effectively, the World Gold Council noted in its report. Analysts believe that if Trump is elected, he could be faced with a world that is even more polarised than his last term, signalling continued geopolitical uncertainty.
On the other hand, if the Harris administration tries to implement reforms, it could face greater resistance than the Biden administration, and Congress could be divided, making it difficult to pass legislation. Either way, gold will do well as a safe-haven asset.
Chris Gaffney, president of global markets at EverBank, said the main factor fuelling gold at the moment is the market’s expectation that the Fed may actually decide to cut interest rates earlier than September.
In addition, India’s announcement to cut import duties on gold and silver is also favourable to gold prices as it will increase demand.
According to the CME Fed Watch tool, the market expects a 100 per cent chance of a rate cut by the central bank in September.
