Gold prices edge higher; rebounding after sharp losses

Investing.com– Gold prices edged higher Friday, rebounding after the previous session’s steep losses as traders reassessed the potential for geopolitical tensions during a Donald Trump presidency.

At 09:20 ET(14:20 GMT), spot gold rose 1.1% to $2,688.27 an ounce, while gold futures expiring in December climbed 0.7% to $2,695.75 an ounce. 

The yellow metal had notched up a series of record highs in the run-up to the elections, but tumbled more than 3% on Wednesday after Trump’s victory saw the dollar rally to four-month highs. 

A quick conclusion to a hotly contested presidential election also cleared a key point of uncertainty for global financial markets, triggering a risk-on rally across the board, while pressuring safe-haven assets such as gold.

Gold gains on geopolitical uncertainty

However, the yellow metal found a floor on Thursday, as Trump ran a campaign vowing to increase trade tariffs on China, which could trigger a renewed trade war between the world’s biggest economies. 

“While a stronger dollar may act as a headwind for the precious metal, this could be offset by a geopolitical uncertainty that may accompany a Trump presidency. Gold has long been a safe haven asset during times of elevated geopolitical risk,” said analysts at ING, in a note.

“Trump’s proposed policies, including tariffs and stricter immigration controls, which are inflationary in nature, could limit interest rate cuts from the Fed. A stronger dollar and tighter monetary policy could provide headwinds to gold and industrial metals. Tariffs also provide a downside risk to global growth, which would be negative for industrial metals demand. However, for gold, increased trade friction could add to the precious metal’s haven appeal.”

Other precious metals edged higher Thursday. Platinum futures fell 0.3% to $995.70 an ounce, while silver futures fell 1.3% to $31.735 an ounce, with both metals also suffering steep losses in recent sessions.

The focus Thursday will largely be on the conclusion of a Federal Reserve meeting later in the day, where the central bank is widely expected to cut interest rates by 25 basis points.

Markets remain skittish over what the Fed will signal regarding future rate cuts, especially in the face of sticky inflation and a Trump presidency. 

Copper upbeat as China imports remain steady 

Among industrial metals, copper prices rose on Thursday, recovering some measure of recent losses as trade data from China showed the country’s copper imports remained steady in October. 

Benchmark copper futures on the London Metal Exchange rose 3.3% to $9,632.50 a ton, while December copper futures rose 3.8% to $4.4065 a pound. Both contracts slid between 4% and 5% on Wednesday, as markets feared increased economic headwinds for China from a Trump presidency. 

China is the world’s biggest copper importer, and fears of slowing demand in the country have been a key weight on prices in recent months. 

Still, data on Thursday showed China imported 506,000 metric tons of unwrought copper and copper products in October, up 1.1% year-on-year.

(Ambar Warrick contributed to this article.)