Gold Dips Below $2,400 as Biden's Exit Sparks Market Reassessment
While Sunday’s announcement from U.S. President Joe Biden that he would not seek reelection in November did not shock political insiders or market participants, it has forced a repricing of risk across financial markets, impacting gold prices on Monday.
In the medium term, many analysts see the President’s withdrawal as a positive for the precious metal, as the departure of the ‘known known’ Biden creates further instability in an already tumultuous race for the White House, which should support gold’s safe haven status.
“The precious metal’s appeal strengthened as investors sought a hedge against an uncertain political and market outlook,” wrote analyst James Hyerczyk at FX Empire in a market update. “President Joe Biden’s decision to abandon his reelection bid has cleared the way for another Democrat to challenge Donald Trump. This political shift has contributed to a weaker dollar, making gold more attractive to buyers holding other currencies.”
Hyerczyk said that if Trump is elected, the Republican candidate’s proposed economic policies could potentially fuel inflation.
“His plans include corporate tax cuts, interest rate reductions, and stricter trade relations, particularly with China,” he wrote. “Analysts warn that these measures, especially the implementation of tariffs, could act as inflationary pressures.”
Turning to the technical picture, Hyerczyk said that the “50-day moving average at $2359.86 serves as a key support level, with the 200-day MA at $2163.01 providing long-term support,” but cautioned that while gold prices remain in a longer-term uptrend for the time being, there are significant downside risks.
“Immediate support is at $2385.28; a break below could trigger a short-term pullback,” he said. “The $2450-2480 range presents near-term resistance. A move above $2483.74 could target $2500. However, if price falls below the 50-day MA, it might signal a deeper correction.”
“The significant gap between current price and the 50-day MA suggests the market may be overbought in the short term,” he concluded.
Meanwhile, short-term traders watched with concern as the yellow metal fell to support during the North American session.
“Gold fell as expected. Currently, the support level below is $2,384,” wrote analyst Jennie in an X post. “If the US market falls below this level, the next target for gold will be $2,366.10. If gold cannot fall below this level, it will stop falling and rebound. The short-term targets above are $2,390 and $2,400.”
“New intraday low for gold, bearish reversal was confirmed,” said Elliott wave analyst Grega Horvat. “The correction will be much deeper and a higher degree.”
After falling to a session low of $2,383.93 just after 10:30 am EDT, spot gold has staged a modest recovery, though it has yet to reclaim the $2,400 level.
Spot gold last traded at $2,391.99 per ounce at the time of writing for a loss of 0.37% on the daily chart.
