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Gold

Gold Edges Lower as Trump Appears to Take Early Lead in US Vote

David McAlvany, CEO and portfolio manager at McAlvany Financial Companies, talks about the outlook on gold and the gold miners.

(Bloomberg) -- Gold edged lower as investors monitored a tight US election that could prove massively consequential for financial markets.

Bullion traded near $2,735 an ounce as a gauge of the dollar surged, making the precious metal more expensive for many buyers. Republican nominee Donald Trump jumped out to an early Electoral College lead over Democrat Kamala Harris, though none of the swing states likely to be decisive in determining the presidency have been called.

Given the closeness of the race, it’s possible a final result may not be known for days or even longer, with the uncertainty potentially benefiting the precious metal.

Some investors have bet heavily on a Trump victory in recent weeks. 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.

Spot gold was 0.3% lower at $2,734.86 an ounce as of 11:48 a.m. in Singapore. The Bloomberg Dollar Spot Index climbed 1.4%. Silver, platinum and palladium fell.

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