Gold News: Election and Fed in Focus – Can Gold Prices Find New Momentum?

Gold Holds Steady as US Election and Fed Decision Approach

Gold prices are stabilizing as traders focus on this week’s key events: the U.S. presidential election and the Federal Reserve’s upcoming rate decision. With a tight race between Kamala Harris and Donald Trump, the outcome is expected to drive immediate market reactions and influence gold’s performance. Traditionally, gold benefits during periods of economic and political uncertainty, a factor that has contributed to its 33% gain this year as investors flock to safe-haven assets.

Technically, gold is in an uptrend, but short-term momentum is pointing lower, setting up a possible retracement into $2708.76 to $2697.28. On the upside, minor resistance is $2749.47. This is also the trigger point for a surge into the all-time high at $2790.17.

If we get the volatility we expect from the election and Trump wins, you may want to wait for a pullback into the 50-day moving average at $2633.13 before re-entering the long side.

At 12:16 GMT, XAU/USD is trading $2741.63, up $5.03 or +0.18%.

Fed Rate Cut Likely to Have Limited Short-Term Impact

The Federal Reserve is expected to announce a quarter-point rate cut on Thursday, marking its second reduction this year. While rate cuts generally support gold by reducing the opportunity cost of holding the non-yielding asset, the Fed’s impact may be muted this week given the overriding importance of the election outcome. Analysts, including Commerzbank, suggest that traders will likely focus on the election’s immediate influence over any Fed policy adjustments.

Trump Victory Could Weigh on Gold Prices

A Trump win could place near-term pressure on gold due to expectations of a stronger dollar and rising bond yields. Trump’s policy approach—emphasizing tax cuts, tariffs, and reduced government spending—tends to support the dollar, which could dampen gold’s appeal. Following his 2016 election win, both the dollar and equities rallied while gold saw a significant pullback. Analysts suggest a similar market response could emerge, potentially limiting gold’s upside if Trump’s policies strengthen the dollar further.

Harris Win Could Boost Gold with Weaker Dollar Expectations

Conversely, a Harris win could create a supportive environment for gold by signaling continued low-rate policies and a softer dollar. A weaker dollar, driven by Harris’s less inflationary economic approach, would typically favor gold prices. Her policies could also prompt a short-term correction in Wall Street indices, adding to safe-haven demand. In this scenario, gold has potential to move above $2,800 as traders seek stability amidst the policy transition.

Lingering Election Uncertainty May Drive Safe-Haven Demand

An additional factor is the potential delay in finalizing election results due to the close race and absentee ballot counts. A prolonged outcome could spark short-term safe-haven demand for gold, with prices likely holding steady around $2,740 per ounce as markets await clarity. Paired with anticipation over the Fed’s statement, the election’s impact on gold remains a key focus.

Market Forecast: Neutral to Bullish Bias for Gold

With mixed influences at play, gold’s outlook remains neutral to bullish. A Harris win may catalyze a rally above $2,800, while a Trump win could lead to a temporary pullback. Regardless, broader geopolitical tensions and investor demand for safe-haven assets should keep gold supported in the near term.