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Safe-Haven Gold Firms as Biden Move Sparks Market Uncertainty

A jeweler shows a gold bar at his shop in downtown Kuwait City on May 20, 2024. (Photo by YASSER AL-ZAYYAT / AFP)
A jeweler shows a gold bar at his shop in downtown Kuwait City on May 20, 2024. (Photo by YASSER AL-ZAYYAT / AFP)
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Safe-Haven Gold Firms as Biden Move Sparks Market Uncertainty

A jeweler shows a gold bar at his shop in downtown Kuwait City on May 20, 2024. (Photo by YASSER AL-ZAYYAT / AFP)
A jeweler shows a gold bar at his shop in downtown Kuwait City on May 20, 2024. (Photo by YASSER AL-ZAYYAT / AFP)

Gold prices firmed on Monday as the dollar eased following US President Joe Biden's decision to withdraw from the 2024 presidential race, with investors turning to bullion as a hedge against an uncertain political and market outlook.
Spot gold rose 0.2% at $2,405.40 per ounce, as of 0510 GMT, while US gold futures gained 0.3% to $2,407.20, Reuters reported.
The prospect of rate cuts and political uncertainty in the United States are supporting gold prices, and conditions are in place for gold to see another record high before the end of 2024, said Kyle Rodda, a financial market analyst at Capital.com.
Making bullion more attractive to buyers holding other currencies, the dollar eased in the initial reaction to US President Joe Biden abandoning his reelection bid, clearing the way for another Democrat to challenge Donald Trump.
When accepting the Republican nomination on Thursday, Trump reiterated his promise to cut corporate taxes and interest rates. Analysts also expect a Trump presidency would make for tougher trade relations, which could result in inflationary tariffs.
"I think there is an almost unstoppable process of decoupling between the US and China, it will only become more severe or accelerate if it is a Trump presidency. Gold will certainly benefit from greater geopolitical tensions," Rodda said.
Prices scaled an all-time high of $2,483.60 last week on increased chances of US interest rate cuts this year, with markets pricing in a 97% chance of a cut in September, according to the CME FedWatch Tool.
On the data front, the main focus this week will be on Friday's US personal consumption expenditures (PCE) figure and other data including July S&P Global flash PMIs, advance second-quarter GDP, and weekly jobless claims.
Among other metals, spot silver fell 0.5% to $29.11 per ounce, platinum slipped 0.3% to $959.99, while palladium rose 1.1% to $916.18.

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UK Borrowing Overshoot Underscores Task for New Government

Larry the Cat sits on Downing Street in London, Britain July 19, 2024. REUTERS/Toby Melville
Larry the Cat sits on Downing Street in London, Britain July 19, 2024. REUTERS/Toby Melville
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UK Borrowing Overshoot Underscores Task for New Government

Larry the Cat sits on Downing Street in London, Britain July 19, 2024. REUTERS/Toby Melville
Larry the Cat sits on Downing Street in London, Britain July 19, 2024. REUTERS/Toby Melville

Britain's government borrowed a lot more than forecast in June, according to official data published on Friday that highlighted the big budget challenges facing the new government of Prime Minister Keir Starmer.
Public sector net borrowing, excluding state-controlled banks, was a larger-than-expected 14.5 billion pounds ($18.75 billion) last month. A Reuters poll of economists had pointed to an increase of 11.5 billion pounds.
Dennis Tatarkov, Senior Economist at KPMG UK, said the data showed "the daunting task" for the new government to fund its agenda without worsening the public finances.
"A combination of high levels of spending and weak growth prospects will present uncomfortable choices – deciding between even more borrowing or substantially raising taxes if spending levels are to be maintained," he said.
New finance minister Rachel Reeves is likely to announce her first budget after parliament's summer recess. She and Starmer have ruled out increases in the rates of income tax, corporation tax and value-added tax, leaving her little room for maneuver to improve public services and boost investment.
Reeves has ordered an immediate review of the new government's "spending inheritance", a move that lawmakers from the opposition Conservative Party say could presage increases in taxes on capital gains or inheritances.
"Today's figures are a clear reminder that this government has inherited the worst economic circumstances since the Second World War, but we’re wasting no time to fix it," Darren Jones, a deputy Treasury minister, said after the data was published.
Starmer's government says it will speed up Britain's slow-moving economy - and generate more tax revenues - via a combination of pro-growth reforms and a return to political stability that will attract investment.
The borrowing figure for June was 2.9 billion pounds higher than expected by Britain's budget watchdog whose forecasts underpin government tax and spending plans.
In the first three months of the financial year which began in April, borrowing was 3.2 billion pounds higher than projected by the Office for Budget Responsibility at 49.8 billion pounds.
The Office for National Statistics said June's borrowing was the lowest for the month since 2019, helped by a big drop in spending on interest paid on bonds linked to inflation which has slowed sharply.
But the deficit was made bigger by a 1.2 billion-pound fall in social security contributions compared with June 2023. They were cut by former Prime Minister Rishi Sunak before the July 4 election that swept Starmer's Labour Party to power.