By Adam Claringbull
Investing.com – Gold was down on Wednesday morning in Asia as investors push into the dollar over U.S. election outcome concerns.
Gold futures were down by 0.59% at $1,899.10 by 12:08 AM ET (4:08 AM GMT).
Uncertainty over the U.S. election results is drawing investors to the greenback. With the outcome of the U.S. presidential election very much in the balance, investors looking to a second Trump term are moving toward the dollar to hedge their positions.
“The market is losing confidence in a clear run to a Biden victory at the moment ... We have seen the Biden trade unwind and a big effect of that is that we have seen the dollar strengthen,” said IG Markets analyst Kyle Rodda to Reuters.
Democrat Joe Biden has been widely predicted to win the vote; however, the race is tighter than expected, with President Trump currently ahead in his must-win state of Florida, other battleground states are too close to call. With the likely narrow margins of victory for either side, a clear result may also take weeks to become known, and potentially lead to severe social disruption.
Investors who had factored in a Biden win had also looked to the likelihood of a Democrat president delivering a large COVID-19 stimulus program, which would have pushed the dollar down, and brought up gold prices. With the current uncertainty, many are now hedging by taking dollar positions.
“Gold has faded ahead of resistance at $1,912 and is suffering as it appears Trump will hold the key swing state of Florida,” said senior market analyst at OANDA, Jeffrey Halley to Reuters.
For now, all eyes are on the U.S., with state election results being called over the rest of the day. Investors are also looking to the U.S. Federal Reserve and Bank of England monetary policies, due on Thursday.