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Analysts await US Presidential debate for gold direction

Monday, September 26, 2016

Analysts are expecting the gold price to increase if US Presidential hopeful Donald Trump appears to take a lead over rival Hillary Clinton in today’s (Monday September 26) first Presidential debate.

Investors will be watching the debate carefully for signs of who is likely to be the front runner. The uncertainty surrounding Republican candidate Donald Trump is widely predicted to send investors heading for the safe haven of gold supplies if he appears to be ahead in the race.

NAB analyst Vyanne Lai told Reuters: “If Trump is perceived to have an improved probability of winning the Presidential race, that is likely to be supportive of the gold prices, so we could see (gold) prices rallying in the short term amid higher volatility.”

Other factors that are continuing to affect the price of the precious metal include the ongoing speculation over whether the US will raise interest rates again this year. The price of gold tends to be sensitive to rising interest rates.

At the end of last week, a spilt between policymakers in the rate-setting Federal Reserve seemed to appear, with the Boston Federal Reserve President Eric Rosengren telling reporters he believes the cost of borrowing should only be increased gradually. Members of the Fed seem to be split on the outlook for US employment when deciding whether to increase rates.

Analysts generally expect the Fed to hold off from a further rate rise in its November meeting, which is less than a week before the US presidential election. However, the cost of borrowing could still be increased in December when the markets have had time to settle and assess the new president-elect.

Gold started this week well, maintaining the strong prices it saw at the end of last week. At 09:15 GMT this morning, it was valued at £1,033.20 per troy ounce.

It comes after a strong end to last week, when the precious metal achieved its biggest weekly gain since July.