Gold prices, US stocks rise on election day

Uncertainty surrounding the US presidential election sent gold prices up more than $7, while Wall Street rose more than 1% on upbeat economic data.

At the end of the trading session on November 5, the world spot gold price increased by more than 7 USD to 2,743 USD per ounce. This morning, the price continued to increase, currently trading at 2,744 USD.

"The uncertainty surrounding the US presidential election is affecting the market. Investors are worried that things will not go smoothly, or that import tariffs will be raised, or that economic policy will change a lot," said Daniel Pavilonis, senior market strategist at RJO Futures.

World gold prices have continuously increased over the past year. Chart: Reuters

With recent polls showing no clear advantage between Donald Trump and Kamala Harris, investors are particularly wary of an unclear or contested outcome. "The election outcome could be uncertain for days or even weeks. Gold will benefit from this," Commerzbank said. The US could struggle to decide a winner if the margins in the battleground states are as close as expected.

Han Tan, a strategist at Exinity Group, said gold prices could hit $2,800 “due to the ambiguous outcome” after the election.

Another reason for the rise in gold prices is that investors are almost certain that the US Federal Reserve will cut interest rates on November 7. Prices have increased 33% this year due to the low interest rate environment and economic and political instability around the world.

US stocks also rose sharply yesterday, thanks to optimistic data on the world's largest economy. At the end of the session on November 5, the S&P 500 index increased 1.2% to 5,782 points. The DJIA increased 1% to close at 42,221 points, while the Nasdaq Composite increased 1.4% to 18,439 points.

The Institute for Supply Management (ISM) said yesterday that its services purchasing managers index (PMI) continued to accelerate in October, reaching 56 points. The US economy is increasingly forecast to have a soft landing, thanks to rising corporate profits, lower interest rates and a solid labor market.

Still, investors are watching and anticipating the outcome of the US presidential election, bracing for the possibility of prolonged uncertainty. Shares of Trump Media & Technology Group, an indicator of investors’ expectations of Trump’s chances of winning, fluctuated wildly yesterday. At one point, the stock rose as much as 18.6%, then fell 8.4%. At the close of trading, Trump Media lost 1.1%.

In the currency market, the Dollar Index - which measures the greenback's strength against a basket of major currencies - is currently down 0.4% to 103.4 points. The euro, yen and yuan are all gaining. Each euro is now worth 1.09 USD. One US dollar is now worth 151 yen and 7.1 yuan. These currencies are all likely to be affected if Trump is re-elected and raises import tariffs aggressively.

The price of Bitcoin - the world's most popular cryptocurrency - is currently up 2.8% to $69,800 per coin. During the election campaign, Trump always expressed a friendly stance towards cryptocurrencies.