Gold ticked higher on Monday as caution crept in ahead of Tuesday’s hotly contested U.S. presidential elections, sparking some bids for the safe-haven metal, though a resilient dollar capped gains.
Spot gold rose 0.2% to $1,882.00 per ounce by 0335 GMT, while U.S. gold futures were up 0.2% at $1,882.90 per ounce.
“The longer-term view is bullish on expectations that we are going to get a large stimulus deluge from the U.S. which ultimately should weaken the U.S. dollar and send gold higher,” said Stephen Innes, chief global market strategist at financial services firm Axi.
Gold is seen as a hedge against inflation and currency debasement.
Democrat Joe Biden holds a commanding national lead over President Donald Trump, but Trump has stayed competitive in the swing states that could decide the White House race.
“The election campaign has been fraught due to coronavirus and the focus is on the immediate aftermath amid fears that a period with no clear picture on the outcome could roil the precious metals market,” Avtar Sandu, senior commodities manager at Phillip Futures, said in a note.
A “blue sweep” of both the White House and Senate would bolster the outlook for rapid and large-scale fiscal stimulus which would be positive for precious metals, Sandu added.
Capping bullion’s advance, the dollar held onto recent gains, lowering gold’s appeal to other currency holders.
Europe’s total COVID-19 cases crossed the grim milestone of 10 million on Sunday, prompting countries such as Britain and Portugal to enact fresh lockdowns.
“Gold traders are worried that these lockdowns could lead to deflationary pressures… gold’s next trade is really for a reflation trade,” Axi’s Innes said.
Silver rose 1.2% to $23.92 per ounce and palladium gained 1.7% to $2,250.19, while platinum fell 0.4% to $845.26.