U.S. election and Fed rate decision keep gold price steady near $2,730
Gold could reach $3,000 an ounce within the next six months
Gold prices are holding their ground as investors gear up for a pivotal week that could bring seismic shifts to markets.
The precious metal has managed to stabilize around $2,736.61 an ounce in early Asian trade, reflecting caution ahead of Tuesday’s tightly contested US presidential election and a Federal Reserve rate decision just days later.
Gold election uncertainty and historical patterns
Uncertainty surrounding the presidential race has provided significant support for gold in recent weeks. The idea is simple: a Trump victory, with promises of tax cuts and higher inflation from trade tariffs, could add fuel to inflation expectations. But here’s the twist, history suggests gold could still struggle post-election. Recall, after Trump’s 2016 win, bullion fell by 8.2% in the following month. Citi analysts even highlight a recurring pattern of gold weakness in the weeks following most US elections since the 1980s.
Yet, don’t write off the gold rally just yet. Citi analysts remain bullish, favoring opportunities to buy on dips. They forecast that gold could reach $3,000 an ounce within the next six months.
What’s driving this optimism? A weakening US labor market, persistent ETF demand, and a likely dovish Fed policy environment. Speaking of the Fed, the market broadly expects a 25-basis-point rate cut on Thursday, following a 50-bps reduction in September.Investment flows are telling, too. Commodity trading advisors (CTAs) are heavily long on gold, sensing strong safe-haven demand. But this contrasts sharply with equities, where CTAs might become sellers, especially after last week’s sharp losses in the S&P 500.
The market will be closely watching how this week unfolds, with the Fed’s rate cut decision and the election outcome both in the spotlight.
Gold has taken a breather from its all-time high of $2,790 per ounce. CFTC data shows declining gold speculation as prices hold at $2,740
