Gold prices firmed on Monday (July 22) as the dollar eased following US President Joe Biden’s announcement to withdraw from the 2024 presidential race.

Investors turned to bullion as a safe haven amidst an uncertain political and market outlook.

Global gold prices rise

Spot gold saw a 0.2% increase, reaching $2,405.40 per ounce as of 0510 GMT, according to news agency Reuters.

US gold futures also climbed 0.3% to $2,407.20 per ounce.

The prospect of interest rate cuts and ongoing political uncertainty in the United States are contributing to the strength of gold prices.

According to Reuters, Kyle Rodda, a financial market analyst at Capital.com, noted that “conditions are in place for gold to see another record high before the end of 2024.”

Gold prices in India

In India, gold prices saw a slight increase on Monday.

The cost of 24-carat gold rose to ₹7,521.70 per gram, up by ₹732.00, while 22-carat gold increased to ₹6,889.90 per gram, up by ₹670.00.

Kaynat Chainwala, AVP-Commodity Research at Kotak Securities, noted, “After a sharp pullback from all-time highs last week, Comex gold edged higher today as US election uncertainty weighed on the dollar and treasury yields.”

Market reactions and future outlook

The dollar’s initial reaction to Biden’s decision was to ease, making bullion more attractive to holders of other currencies.

Biden’s withdrawal from the 2024 presidential race clears the path for another Democrat to challenge former President Donald Trump.

Trump has reiterated his promises to cut corporate taxes and interest rates, which analysts believe could lead to tougher trade relations and inflationary tariffs.

Rodda emphasized that “an almost unstoppable process of decoupling between the U.S. and China” will likely continue if Trump returns to office.

“Gold will certainly benefit from greater geopolitical tensions,” he was quoted as saying in Reuters report.

Gold prices recently reached an all-time high of $2,483.60, driven by increased expectations of U.S. interest rate cuts. Markets are currently pricing in a 97% chance of a rate cut in September, according to the CME FedWatch Tool.

Upcoming economic data

This week’s focus will be on the US personal consumption expenditures (PCE) figure, alongside other key data including July S&P Global flash PMIs, advance second-quarter GDP, and weekly jobless claims.

According to Bloomberg estimates, US Q2 GDP is expected to expand at a faster pace of 1.9% compared to 1.4% in Q1.

However, this remains significantly lower than the 3.3% growth in Q4 2023.

Core PCE inflation, the Fed’s preferred price gauge, is anticipated to hold steady at 0.1% month-over-month in June, with the year-over-year change expected to fall to 2.5% from 2.6% previously.