The gold price has pulled back sharply today after yesterday’s French election results which saw both pro and anti EU candidates make it to the 2nd round.
At 6.39pm (GMT) gold was trading at $1,275, after hitting a low of $1,265 earlier in the trading session and down from $1,283 yesterday.
In the run up to yesterday’s vote, gold had been gaining ground at the prospect that not one but two Anti EU candidates might square off in the 2nd round but in the end the winners were Emmanuel Macron and Marine Le Pen.
Macron, who is Pro European and business friendly is almost assured of victory in the second round of elections in May which brought a sense of calm over the markets and had investors searching for bigger returns. Tony Farnham at Australian stockbroking and financial services firm Patersons Securities explained,
Macron is the favorite of the markets, so there's been a collective sigh of relief. As a result there was an exit out of the safe haven of gold into riskier investments like stock markets and foreign currency exchange.
The precious metal may have further to fall now that the threat of France possibly leaving the EU and ditching the euro has subsided but it may receive some support on the back of continuing tensions between North Korea and the US the former’s nuclear weapons program. Singapore-listed bank OCBC analyst Barnabas Gan agreed,
Gold prices have fallen sharply this morning due to the improvement in risk sentiment. It does remove some of the suspense and risk-off sentiment we saw late last week.