The impact of political uncertainty on gold is clear as XAU/USD jumped above $2,400 on Monday. This increase stopped a three-day drop in gold prices. The rise comes amid political turmoil in the United States, especially after President Joe Biden dropped out of the presidential race.
How US Impact of Political Uncertainty on Gold
On Sunday, President Biden announced he will end his reelection campaign. He plans to explain his decision more this week. Experts think this uncertainty can increase market volatility. Peter Earle, a senior economist, said, “With uncertainty about the new candidate, investors will look for safe places to invest.”
Global Economic Issues Impacting Gold
Gold price XAU/USD are also affected by global economic issues. In China, the hedge fund industry is facing new regulations starting next month. China’s $715 billion hedge fund sector must now meet higher asset requirements and tougher rules. Some firms may need more funding or might even close.
Federal Reserve’s Influence on Gold Prices
Despite recent comments from the Federal Reserve about possibly lowering interest rates, gold prices didn’t rise much on Friday. The IMF advises that the Fed should wait until late 2024 to cut rates. This week, investors will watch US economic reports, like the S&P Global PMI, Q2 GDP, and PCE index. Strong data might lower the chances of a Fed rate cut and limit gold’s price rise.
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