Gold Prices Stabilize After Recent Decline, Focus Turns to Fed Meeting and U.S. Politics

Gold prices saw little movement in Asian trade on Tuesday, hovering near 11-day lows as traders sought further clarity on U.S. political developments and monetary policy ahead of the Federal Reserve meeting next week.

Despite a significant drop from record highs reached earlier this month, gold remained relatively stable due to some safe-haven demand triggered by uncertainty surrounding the U.S. presidential race following President Biden’s withdrawal from the 2024 reelection bid. While Vice President Kamala Harris has been endorsed as his successor, polls suggest that Donald Trump still holds an edge, raising concerns about the potential impact of his policies on inflation and the dollar.

The resilience of the dollar, fueled by speculation over a potential Trump presidency, has limited gold’s gains despite the safe-haven flows. However, optimism over potential interest rate cuts by the Federal Reserve from September onwards continues to provide some support to gold prices. The central bank is expected to maintain rates at its upcoming meeting next week.

Other precious metals, including platinum and silver, retreated on Tuesday, reflecting the cautious sentiment in the market.

Meanwhile, copper prices extended their recent losses amid growing economic uncertainty surrounding China, the world’s largest copper importer. The slowdown in China’s economic growth in the second quarter and the lack of concrete details on additional stimulus measures from the Chinese Communist Party have contributed to the bearish sentiment towards copper.

Concerns over stricter U.S. monetary policy under a potential Trump presidency have also dampened demand for China-exposed assets like copper.

In conclusion, gold prices remained relatively stable after a recent decline, as investors await further clarity on U.S. politics and the Federal Reserve’s monetary policy. The uncertain political landscape and the looming Fed meeting have created a cautious atmosphere in the precious metals market. Meanwhile, copper prices continue to struggle due to concerns over China’s economic outlook and the potential impact of U.S. policy changes under a new administration.