LONDON: Gold pared losses after sliding over 1% on Wednesday as the dollar steadied and expectations that Democrat Joe Biden could win the American presidential election bolstered hopes for a larger US stimulus.
Spot gold had inched down 0.1% to $1,906.80 per ounce by 9:28 a.m. EST (1428 GMT). US gold futures were flat at $1,909.70.
“As this election process is starting to drag down, we’re starting to see that there is a slight edge to a Biden victory outcome and that’s why we saw the dollar paring its gains,” said Edward Moya, senior market analyst at OANDA.
Biden is expected to inject large amounts of stimulus to ease the economic fallout of the COVID-19 pandemic. Safe-haven gold is considered a hedge against inflation and currency debasement, which are likely to result from a large stimulus.
“We wanted to have election certainty and we obviously did not get that. Everyone is trying to figure out how things are going to unfold and the big risk is that we go to the courts ... that is going to drive the safe-haven demand,” Moya added.
The presidential election was hanging in the balance, with a handful of states set to decide the outcome in the coming hours or days, even as Donald Trump falsely claimed victory and made unfounded allegations of electoral fraud. “People are pretty cautious right now, because we have had so many back-and-forth flips going on and the fear that this is going to drag out to Friday and there could be more curveballs,” said Bob Haberkorn, senior market strategist at RJO Futures. In other metals, silver fell 0.6% to $24.00. Platinum rose 0.2% to $867.89 and palladium eased 0.1% to $2,280.52.—Reuters
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