Gold holds steady as the market awaits the US election results

Gold held steady on Wednesday as investors anxiously awaited the outcome of a hotly contested US presidential election.

Spot gold held firm at $2,740.61 per ounce. Bullion hit a record high of $2,790.15 last Thursday.

US gold futures was marginally lower at $2,749.10 per ounces.

Republican Donald Trump won 14 states in Tuesday’s US presidential election, while Democrat Kamala Harris captured four states and Washington, DC, Edison Research expected, but critical battleground states were unlikely to be called for hours or even days.

It’s 95% about the U.S. election this week, with a 5% sprinkling of the Federal Reserve to add a touch of spice, said Kyle Rodda, financial market analyst at Capital.com.

“Gold is part of the Trump trade and should long-term benefit from a Trump victory, mostly because of the effects of huge deficit spending, but also because of potentially more uncertain US foreign policy,” Rodda said.

Traders are also awaiting the Fed’s two-day policy meeting, which ends on Thursday, and Chairman Jerome Powell’s remarks for further direction.

Markets generally expect the Fed to announce a quarter-point interest rate cut this week, following the cut in September.

“While markets expect a 25-bp cut this week, the Fed may avoid a dovish tone due to the inflationary impact of Trump’s policies,” said Matt Simpson, senior analyst at City Index.

Gold is considered a hedge against geopolitical and economic uncertainties and tends to thrive in a low interest rate environment.

The U.S. trade deficit widened to the highest in nearly 2-1/2 years in September, data released Tuesday showed.

Elsewhere, the Perth Mint reported a fall in gold sales in October, while silver sales fell to a four-month low.