Gold prices fell on Wednesday as the dollar firmed after early results from the U.S. presidential election showed the race was tighter than expected, with President Donald Trump winning in Florida and leading in a few other battleground states.
Spot gold fell 0.5% to $1,898.97 per ounce by 0642 GMT, paring losses from a more than 1% fall earlier after some investors used price dips to buy gold. U.S. gold futures dropped 0.5% to $1,900.20 per ounce.
“The market is losing confidence in a clear run to a Biden victory at the moment … We have seen the Biden trade unwind and a big effect of that is that we have seen the dollar strengthen,” said IG Markets analyst Kyle Rodda.
Trump won the battleground of Florida and took the lead over Biden in other U.S. swing states on Tuesday, but Biden voiced confidence he would win the election by taking three key Rust Belt states.
“The confidence that market participants had earlier about a clear result is slipping… Only when you get a decisive outcome we will get a definitive direction in the (gold) market,” said Harshal Barot, senior research consultant for South Asia at Metals Focus.
But there is a set of strategic investors keen to buy any major dips in gold and “there’s still a lot of uncertainty ahead for the global economy in terms of rising virus cases and fresh lockdowns,” Barot said.
Biden was expected to inject large stimulus into the economy to aid the pandemic-hit economy.
Gold is seen as a hedge against inflation and currency debasement, likely to result from the large stimulus.
The dollar was up 0.4% against a basket of major currencies.
Silver fell 1.7% to $23.75. Platinum dropped about 1% to $858.38 and palladium slid 0.5% to $2,270.78.
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