Gold prices moved up on Tuesday, with uncertainty surrounding the U.S. Senate runoff elections in Georgia offering support for the haven metal.
A climb in the U.S. ISM manufacturing index to its highest since August 2018, along with strength in the domestic stock market, had led to earlier losses for gold.
Gold is finding support from Tuesdayâ€™s â€œrunoff elections in Georgia more than anywhere else,â€ Jeff Wright, executive vice president of GoldMining Inc., told MarketWatch.
The fear is if Democrats win and â€œcontrol both houses of Congress, they will push through radical tax policy, run away spending, and alter any semblance of divided government.â€
If Democrats win both seats, that could make it easier for President-elect Joe Bidenâ€™s administration to pass legislation that could influence trading in stocks, including the repeal of corporate tax cuts put in place under the Trump administration.
The result of the Senate runoff elections in Georgia will have â€œmassive implications for the country over the coming years,â€ wrote Craig Erlam, senior market analyst at Oanda, in a daily research note.
â€œThe Republicanâ€™s only need one seat to retain their majority with a double Democrat victory giving them a de facto majority, given the casting vote of the vice President [Kamala Harris],â€ he said.
In Tuesday dealings, gold for February delivery GCG21, +0.39% GC00, +0.39% rose $5.60, or 0.3%, to $1,952.20 an ounce, following a 2.7% gain on Monday that took bullion to its highest level since early November, according to FactSet data.
Wright said heâ€™s â€œlooking for gold to return to $2,000 in the coming weeks after the Biden administration takes over.Â â€
Meanwhile, renewed implementation of lockdown measures in the U.K, E.U. and U.S. in particular to limit the spread of the coronavirus caused some consternation on Wall Street and, perhaps, bolstered appetite for bullion.
TheÂ highly transmissible strain of COVID-19 recently discovered in the U.K. has also been found in New York, the stateâ€™s governor said Monday, and London announced a stricter national lockdown, even as vaccines are being rolled out in many parts of the world.
However, U.S. data released Tuesday morning revealed that the ISM manufacturing index climbed to 60.7% in December, from 57.5%, to reach its highest level since August 2018, dulling appetite for gold and prompting some losses in earlier dealings. U.S. benchmark stock indexes also traded broadly higher, a day after their first losses to open a new year since 2016.
A soft start for U.S. dollar, after its steepest annual slide since 2017, also was helping to buttress gold and silver prices. The ICE U.S. Dollar Index DXY, -0.46% was off 0.5% on Tuesday at around 89.466, hanging around its lowest level since the spring of 2018. A weaker dollar can make gold more attractive to overseas buyers.
Rounding out metals action on Comex, March copper HGH21, +2.34% tacked on 2.2% to $3.6335 a pound. April platinum PLJ21, +4.44% added 4.5% to $1,119.70 an ounce and March palladium PAH21, +3.78% traded at $2,513 an ounce, up 5.1%.