Gold had the biggest weekly gain since July and copper rose as American Democratic candidate Joe Biden tightened his grasp on the White House race, while investors also weighed up expectations for more stimulus from the Federal Reserve.
The Federal Reserve System is the central banking system of the United States of America.
Bullion broke out of a narrow trading range caused by the uncertainty about the US election over the past month and revived stimulus expectations fueled demand for the metal as a safe haven.
Bullion is gold, silver, or other precious metals in the form of bars, ingots, or specialized coins that is said to maintain its worth better than conventional currencies and is therefore kept as a form of emergency currency by both governments and private citizens alike.
In Pennsylvania, Democrat Joe Biden took the lead over President Donald Trump, placing him on the cusp of victory in the presidential race.
Bullion gave up some of the early advances as “stocks have come off highs and the dollar is making a modest comeback”, said Tai Wong, head of metals derivatives trading at BMO Capital Markets. “There also seems to be some notable profit-taking that started around $1,960.”
According to Wenyu Yao, senior commodity strategist at ING Bank, the market is looking at an increased possibility of a Biden win, and a stimulus package, even if it’s quite a modest one, could still be on the horizon. Investors would still like to add gold to their portfolios, she added.
After gaining as much as 0.6 percent, spot gold rose 0.1 percent to close at $1,951.35 an ounce. That extended the gain to 3.9 per cent this week. The Bloomberg Dollar Spot Index declined 0.3 per cent.
Copper rose 1.4% in base metals to settle at $6,946.50 per ton in London, capping a 3.4% weekly advance. An earlier loss was reversed by Zinc to hit the maximum since May 2019.
A competitive election ending in a divided government would be the least constructive result of all potential results for commodity markets. But copper could still reach fresh highs next year on the back of faltering supply and robust demand, said analysts.
