Gold Prices Attempt a Recovery
Gold prices were up today after several weak trading sessions, though the gains were not close to making up for what has been a prolonged slip in prices since mid-April. The price of gold per ounce came in at $1,221 per ounce, marking a day of gains following a steep decline on Monday and Tuesday as the French election concluded.
Analysts were watching the French election with bated breath, eager to see who would emerge the victor between the centrist En Marche! party and its leader Emmanuel Macron or the far-right National Front party and its head, Marine Le Pen.
Polls had long since predicted that Macron would win in a landslide, already precipitating a decline in gold. Still, especially in the wake of the U.S. presidential election in October, some were skeptical about just how accurate the polls would be.
On Sunday, however, the polls were validated as Macron came away with an impressive margin of victory, triumphing over Le Pen with a 66% share of the vote.
The resounding defeat of Le Pen restored confidence in investors, who were favoring a Macron victory, as he was seen as a more stable leader, and one whose policies on trade, immigration, the euro, the European Union (EU), and international relations were more in keeping with a pro-market view.
As the political instability in Europe withdrew as a result of this election result, gold prices sank. Investors no longer needed the safe-haven asset in order to ward off a potential dip in the market if Le Pen had beaten the odds and upset Macron in the election race.
Gold prices also suffered from an increasingly hawkish tone from the U.S. Federal Reserve, which showed renewed confidence in the U.S. economy and, therefore, led to a surging U.S. dollar. These developments also led to a market consensus that the Fed will raise interest rates in June. Both events served to detract from gold’s value.