Gold Prices Decline as Dollar Strengthens Following Trump Incident

Gold prices declined slightly in early Asian trade on Monday, remaining near record highs but experiencing limited increases in safe-haven demand following an alleged assassination attempt on former U.S. President Donald Trump. The keyword here is gold prices.

Safe-haven buying, prompted by heightened U.S. political uncertainty, favored the dollar, which recovered some of its recent losses on Monday. Despite this recovery, the dollar remained weak amid increasing bets on U.S. interest rate cuts, which had buoyed gold prices in recent weeks.

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Political Uncertainty and Its Impact on Gold Prices

Spot gold fell 0.2% to $2,407.49 per ounce, while gold futures expiring in August decreased by 0.4% to $2,412.20 per ounce by 20:34 ET (00:34 GMT).

Markets were grappling with an uncertain political outlook for the U.S. after a failed assassination attempt on Trump at a campaign rally in Butler, Pennsylvania, on Saturday. The assailant shot at Trump, hitting him in the ear, although the former president was seen urging supporters to "fight!" despite the attack.

Heightened political tensions in the wake of the incident were initially expected to support safe-haven investments in gold prices. However, this scenario did not materialize as anticipated, with the dollar benefiting from some inflows, while the yellow metal largely retreated.

Analysts speculated that the attack could improve Trump’s chances of a victory over Democratic frontrunner Joe Biden later this year. A Trump presidency is expected to potentially add to inflation and debt, a scenario that typically results in a stronger dollar.

The greenback rose about 0.2% against a basket of currencies, although it was still recovering from steep losses over the past two weeks.

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Traders' Caution Towards Gold Prices

Traders exercised caution towards gold prices, which were trading close to their record high of $4,050 per ounce reached earlier this year. Historically, gold prices have experienced sharp declines after briefly reaching record highs.

The yellow metal, along with broader metal markets, had benefited significantly from increased speculation over interest rate cuts by the Federal Reserve. A soft consumer price index inflation reading from last week led traders to ramp up bets that the Fed will cut rates by 25 basis points in September, a notion that had negatively impacted the dollar.

Decline in Other Precious Metals

Other precious metals also retreated on Monday, seeing little immediate safe-haven demand. Platinum futures fell 0.6% to $1,007.65 per ounce, while silver futures declined 0.9% to $30.890 per ounce.

Copper Prices Edge Lower Amid Chinese Economic Concerns

Among industrial metals, copper prices fell on Monday, extending losses from last week amid persistent concerns over top importer China. Data on Friday showed China’s imports of the red metal fell in June, raising questions over domestic demand.

Benchmark copper futures on the London Metal Exchange fell 0.4% to $9,841.50 per tonne, while one-month copper futures decreased by 0.4% to $4.5633 per pound.

Attention is now focused on key Chinese gross domestic product data for the second quarter, due later on Monday. The reading is expected to indicate some cooling in growth, which could negatively impact copper demand.

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News Source:- investing.com