Gold rallies above $1,700 as dollar weakens amid election jitters
2022.11.08 19:19
Gold rallies above $1,700 as dollar weakens amid election jitters
Budrigannews.com – Gold prices jumped to a one-month high on Wednesday, benefiting from resurgent safe haven demand and a weakening dollar as investors awaited the results of the U.S. midterm elections, with broader metal prices also gaining.
traded above $1,700 for the first time since early-October, rising to $1,712.62 an ounce by 18:44 ET (23:44 GMT), while edged up to $1,715.90 an ounce. Both instruments jumped over 2% in late trade on Tuesday.
Weakness in the dollar, which slipped to an over 1-½ month low this week, greatly aided a rally in metal markets. The traded down 0.5% at 109.61 early-Wednesday. also tumbled over 2%.
Bullion prices shot up this week as some uncertainty over the results of the U.S. midterm elections drove safe haven buying into the yellow metal. While markets are broadly expecting a mixed result, a clear-cut majority for the incumbent Democrats or re-elected Republicans could herald changes in monetary and fiscal policy.
Speculation over a smaller interest rate hike by the Federal Reserve in December also weighed on the dollar, after several Fed officials said they supported such a move. Markets are now the central bank will raise rates by 50 basis points (bps) in December, smaller than November’s hike of 75 bps.
data due on Thursday is expected to shine more light on this front. The reading is widely expected to show inflation remained stubbornly high in October, which could see the Fed position for a bigger rate hike.
The dollar also saw some profit taking, as investors locked in gains from a stellar rally by the greenback this year.
Among industrial metals, copper prices traded near a two-month high after rallying nearly 2% on Tuesday. were steady at $3.6627 a pound on Wednesday.
While prices of the red metal had initially retreated this week on fears of more Chinese demand disruptions, weakness in the dollar spurred buying into the metal, which has fallen sharply this year.
Strength in the dollar and rising U.S. Treasury yields were the biggest weights on metal markets this year, as the opportunity cost of holding non-yielding assets rose. Copper was also dented by fears that a global economic slowdown will erode demand.
But tightening supply of the red metal may boost its prices in the coming months.
