Gold prices advanced in Asian trading on Wednesday, approaching record highs as the heated presidential debate between Kamala Harris and Donald Trump heightened uncertainty about the 2024 elections. Spot gold increased by 0.1% to $2,519.73 per ounce, while December gold futures rose 0.2% to $2,548.45 per ounce by 00:19 ET (04:19 GMT).
The debate, marked by sharp exchanges and differing economic plans, spurred demand for safe-haven assets. The fiery rhetoric from both candidates intensified market jitters, leading to a decline in the dollar and boosting gold, which is seen as a refuge during periods of political uncertainty.
Gold prices are trading just below a record high of $2,532.05 an ounce, benefiting from increased safe-haven buying amid the debate's fallout. The market is also awaiting key U.S. inflation data due later on Wednesday, which is expected to show a cooling trend in inflation. This data could influence the Federal Reserve’s decision on interest rates, with the central bank likely to cut rates by at least 25 basis points at its upcoming meeting.
Despite recent resilience in the U.S. economy that has led traders to scale back expectations for a larger 50 basis point rate cut, gold remains a favored investment as investors seek stability.
In addition to gold, other precious metals saw gains. Platinum futures increased by 0.1% to $945.50 per ounce, and silver futures rose 0.6% to $28.777 per ounce, although both metals have lagged behind gold in recent months.
In the industrial metals sector, copper prices recovered some recent losses. Benchmark copper futures on the London Metal Exchange rose 0.7% to $9,086.00 per ton, while one-month copper futures increased by 0.6% to $4.1285 per pound. However, concerns over slowing demand in China and potential trade tensions with the West have kept sentiment towards copper cautious.
U.S. lawmakers are preparing new restrictions on Chinese industries, which Beijing has criticised. The potential for renewed trade conflicts, particularly after recent heavy import duties on Chinese electric vehicles, adds to the uncertainty in the global metals market.
The stakes of the debate are significant, as similar debates in the past have influenced presidential races dramatically. Investors generally anticipate a stronger dollar if Trump wins, due to expected tariff-induced currency support and increased fiscal spending potentially driving up interest rates.
Looking ahead, traders are awaiting the U.S. inflation report due on Wednesday and the Federal Reserve’s policy meeting on September 18. Fed funds futures suggest a 69% chance of a 25-basis-point rate cut and a 31% chance of a 50-basis-point cut. U.S. headline CPI is expected to show a 2.6% increase year-on-year for August, down from 2.9% in July.
