Gold Prices Slide as US Political Landscape Shifts
In Monday’s New York session, the price of gold (XAU/USD) dipped below the critical support level of $2,400. This decline comes amid heightened political uncertainty in the United States, following the nomination of Vice President Kamala Harris to lead the Democrats against the Donald Trump-led Republicans. President Joe Biden’s decision not to seek re-election has cleared the way for Harris’s nomination. Historically, investors flock to gold as a safe haven during times of political turmoil.
Simultaneously, the US Dollar (USD) has managed to recover its intraday losses amid increasing risk aversion. The US Dollar Index (DXY), which measures the greenback’s strength against six major currencies, rebounded strongly to around 104.40, up from a four-month low of 103.65. This recovery is driven by the rising likelihood of a Trump victory in the upcoming presidential election. Market analysts view Trump’s potential win as positive for economic growth, given his promises to cut corporate taxes and interest rates, which could elevate consumer inflation expectations. Additionally, experts anticipate increased trade restrictions if the Republicans regain control of the White House. Trump’s prospects improved following an assassination attempt against him.
The interplay of these factors underscores the complex dynamics at play in the financial markets, with gold and the US dollar reflecting investor sentiment in response to evolving political events.
