The price of gold at USD 1,900 per ounce is considered to provide a little peace of mind. This was at least before it was torn apart during the US presidential election on November 3, 2020. It is because the US was highly polarized during this election.
On the other hand, there is the question of whether Trump will accept and concede the result if his rival Biden wins. The uncertainty surrounding the election is a problem. If you don't trust the electoral system, that's a problem as well.
Uncertainty remains a motto in the market. The fact that the gold price has not actually moved and is still steadily trading the range in dollars reflects the reluctance of market participants to take aggressive positions ahead of the election result.
Current Gold Price Range
MKS SA senior vice president of precious metals trader Afshin Nabavi said that for now, the price of gold is likely to remain in the range between USD 1,880 and USD 1,930 per ounce. The price refers more to the dollar and the stock market.
They must penetrate USD 1,925 on the upper side, and on the lower side. A solid support is at USD 1,880. The sentiment is more on the bullish side for metals. Commodity prices will not only be affected by the U.S. election but also the stimulus package.
It is because both presidential candidates see the need for greater spending. The price of precious metals will eventually rise higher. Both candidates will spend money, and that's bullish for gold. The price will rise back to USD 2,000 by the end of the year.
Another thing that makes investors cautious is the potential for a second wave in the case of COVID-19. If this happens, it is likely that local authorities will soon re-enact the lockdown. This is certainly not a favorable situation for market participants and of course investors.
Last Week's Trading Data
Gold prices fell and were heading for their first weekly decline in three weeks in Friday trading. The drop in commodity prices was caused by the fading chances of a US stimulus agreement before the presidential election, which can damage the gold appeal as an inflation hedge.
The price of precious metals in the spot market fell as much as 0.3 percent to USD 1,901.87 an ounce. Bullion was also down 1.4 percent over the week in the market. U.S. gold futures were down 0.1 percent at $1,906.40.
With this year's stimulus bill highly uncertain, the price of gold remains tied to the USD. While sentiment for gold prices remains very bullish without a strong short-term driver, they seem to oscillate around USD 1,900 cannot substantially break through the monthly range of USD 1,850-USD 1,950.
Dollar Index and Its Data
The dollar index fell as much as 0.2 percent on the day but is on track for weekly gains. This makes USD is more expensive for holders of other currencies to buy gold. The U.S. retail sales report that the riskier assets slightly lifted, but in September the manufacturing production fell.
Democrats and Republicans seem unlikely to approve a U.S. stimulus deal before Election Day. It is even as cases of COVID-19 continue to rise and the labor market recovery stalls. The price of gold has risen about 25 percent so far this year.
It is like the decline in currency values and also hedges against inflation. It is especially the case amid unprecedented levels of global stimulus right now. With so many risk events on the horizon, that culminates with the US election.
The analyst is likely to have seen lows for such important commodities especially for the next month or so. However, several news and conditions ahead may change the price and other movements. They must be ready to prepare any strategies.