Gold (XAU/USD) continues to backslide from its record high, eventually finding support at $2,724 early on Tuesday and bouncing back to regain the $2,740s. A marginally weaker US Dollar (USD) due to uncertainty over the US presidential election result is aiding Gold in its rebound, since the precious metal is mostly priced and traded in USD.

This comes as markets increasingly view the final result of the election as polarizing for the US currency, with a victory for Republican nominee Donald Trump USD-bullish but the opposite for Democrat nominee Kamala Harris.

Gold rises from safety flows due to the high level of uncertainty regarding the outcome of the US presidential election, which regardless of the winner alone can be bullish for the yellow metal.

"Regardless of the outcome, significant political shifts can unsettle financial markets, and such uncertainty typically fuels volatility, and both can serve as catalysts for higher Gold prices," says Matthew Jones, precious metals analyst at Solomon Global.

The highly-rated election forecaster 538.com indicates a 50% probability of Vice President Harris winning on Tuesday whilst former President Donald Trump has a 49% chance of victory. That leaves a 1% chance of no overall winner. Over the last 24 hours, Harris has edged into the lead after lagging Trump for several days. This may also explain Gold's turnaround on Tuesday.

Solomon's Jones is bullish on Gold overall, seeing the election outcome as a "win-win" for the precious metal regardless of which candidate is victorious.

A Trump in the White House would lead to "inflationary pressures and geopolitical tensions," according to the analyst, which could, "amplify Gold's appeal as a safe-haven asset, driving demand upward."

Source: FXStreet