Gold gained as markets weighed US President Joe Biden’s decision to end his re-election bid, which sparked fresh questions over whether the move will help or hinder Donald Trump’s chances of returning to the White House.

Bullion rose as much as 0.5% in early Asian hours, benefiting from haven appetite amid heightened uncertainty over what’s already been a tumultuous US election campaign. Biden said he would serve out his term but endorsed Vice President Kamala Harris to take his place in the race, though she must still secure official nomination by the Democrats at the party’s national convention next month.

As the sprint to the November general election gathers pace, polls show Trump is the clear front runner. Support for the Republican candidate grew after he was grazed by a would-be assassin’s bullet at a Pennsylvania rally on July 13. 

A decline in the dollar as markets opened on Monday also boosted gold, with traders potentially leaning into the idea that Trump - should he win election - will push for a weaker US currency. A stronger greenback is usually a negative for bullion, which is priced in dollars.

Still, onlookers have mixed views on what a potential Trump victory would ultimately mean for the precious metal. Some markets have ramped up bets on a so-called “Trump trade” amid expectations for higher trade tariffs, increased US-China tensions and looser fiscal policy under his leadership. That has resulted in support for the dollar and rising Treasury yields - both typically headwinds for gold, which doesn’t pay interest.

Bullion hit a record high last week, after finding support this year, as bets have increased the Federal Reserve will pivot to monetary easing. Lower interest rates are typically positive for gold.

Spot gold was 0.3% higher at US$2,408.99 as of 8.12am in Singapore. The Bloomberg Dollar Spot Index fell 0.2%. Silver, platinum and palladium all gained.

  - Bloomberg