In a surprising turn of events, President Joe Biden announced on July 21, 2024, that he would not seek re-election, instead endorsing Vice President Kamala Harris as the Democratic candidate for the 2024 presidential race. This decision has sent ripples through both political and financial markets, with immediate effects observed in currency and commodity trading.Gold prices have seen a notable increase in response to the news, with spot gold rising 0.2% to $2,405.40 per ounce, while US gold futures gained 0.3% to $2,407.20. Kyle Rodda, a financial market analyst at Capital.com, suggests that “the prospect of rate cuts and political uncertainty in the US is supporting gold prices, and the conditions are in place for gold to reach another historic high before the end of 2024”.The US dollar has weakened in the wake of Biden’s announcement, falling 0.1% according to the Bloomberg Dollar Index. This decline makes gold more attractive to buyers holding other currencies. The euro gained 0.11% to $1.0895, while the dollar slipped 0.08% to 157.38 yen.Investors are now reassessing their political bets, with some analysts suggesting that a potential Trump presidency could lead to higher trade tariffs and looser fiscal policy. Rodda believes that “there is an almost unstoppable process of decoupling between the US and China, which would only worsen or accelerate under a Trump presidency, and that gold would undoubtedly benefit from increased geopolitical tensions”.As markets digest this unexpected political development, all eyes will be on the upcoming economic indicators, including the personal consumption expenditure data set to be released on Friday, as well as the Standard & Poor’s Global Purchasing Managers’ Index for July and the second-quarter GDP. These factors, combined with the evolving political landscape, are likely to continue influencing gold prices and currency markets in the coming weeks.
Key points
- President Joe Biden has withdrawn from the 2024 presidential race, endorsing Vice President Kamala Harris.
- Gold prices have risen in response to political uncertainty, with spot gold up 0.
- The US dollar has weakened, falling 0.
- Analysts suggest that a potential Trump presidency could lead to increased geopolitical tensions and higher gold prices.
2% to $2,405.
40 per ounce.
1% according to the Bloomberg Dollar Index.
