Gold fell on Wednesday morning in Asia’s precious metals. Investors were pushing into the dollar over U.S. election outcome concerns.
By 12:08 AM ET (4:08 AM GMT), gold futures were down by 0.59% at $1,899.10.
Uncertainty over the U.S. election results is drawing investors to the dollar. Investors looking to a second Trump term are moving toward the safe-haven currency to hedge their positions.
At the moment, the market is losing confidence in a clear run to a Biden victory. This was according to IG Markets analyst Kyle Rodda. They’ve seen the Biden trade unwind and a big effect of that is that they’ve seen the dollar strengthen.
Democrat Joe Biden has been widely predicted to win this year’s U.S.presidential elections. However, the race is tighter than expected as President Trump is currently ahead in Florida.
Other battleground states are too close to call. The margins of victory for either side are likely narrow. It may also take weeks to see a clear result and potentially lead to severe social disruption.
If Biden wins, he would be delivering a large COVID-19 stimulus program, which would have pushed the dollar down. Additionally, it would have brought up prices of the yellow metal gold.
Hedging by Taking Dollar Positions
Many are now hedging by taking dollar positions. This is due to the current uncertainty on the election outcome.
Senior market analyst at OANDA, Jeffrey Halley said gold has faded ahead of resistance at $1,912. It is suffering as it appears Trump will hold the key swing state of Florida, he said.
Right now, all eyes are on the U.S.state election results coming in over the rest of the day. Furthermore, investors await the U.S. Federal Reserve and Bank of England monetary policies as they are due on Thursday.
Meanwhile, in commodities news, the U.S. formally exited the Paris Agreement on Wednesday, fulfilling President Trump’s year-long promise. That was to withdraw the world’s second-largest greenhouse gas emitter from the global pact to fight climate change.
But for how long, it is the outcome of the tight U.S. election contest that will determine. The incumbent president’s Democratic rival, Joe Biden, has promised to rejoin the agreement if elected.
Trump’s intention to withdraw the United States from the pact was first announced in June 2017. He argued it would undermine the U.S. economy. But due to concerns over the requirements of the deal, he was unable to formally do so until now.