The gold price is taking a breather today after making a run for the $1,300 level on the back of US dollar strength as traders await tomorrow’s elections in the UK which depending on the outcome, could see the precious metal move significantly higher.
The election is expected to be very close and although Prime Minister Theresa May is expected to win, it is not a foregone conclusion, and Should Jeremy Corbyn and the Labour party come up trumps, the gold price is expected to surge higher,
“The two main drivers of gold are the value of theU.S.dollar and uncertainty,” said Jeffrey Halley, market strategist at Oanda Corp.
The double whammy has seen traders pile into gold and, given the power of the rally this week, I can’t see any other outcome than a test of $1,300 sooner rather than later.” He added.
The US Federal Reserve meet next week to announce their latest interest rate decision where the market expects a hike of 25 basis points that may take the shine off gold but not all are convinced as the following monetary statement will be equally as important,
"We do expect gold to hit some turbulence as we approach the June Fed rate hike, but things could open up for the precious metal post-meeting if the central bank's language remains dovish," said INTL FCStone analyst Edward Meir.