Gold Is Jittery Awaiting US Elections Outcome

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Gold Is Jittery Awaiting US Elections Outcome

On November 3, gold prices edged down as cautious investors now await the outcome of the much-awaited US presidential election. Going into the electio

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On November 3, gold prices edged down as cautious investors now await the outcome of the much-awaited US presidential election. Going into the election, President Trump was closely trailing Democrat nominee Joe Biden in most of the national opinion polls.

Spot gold lost 0.1% to trade at $1,892.73 per ounce by 0533 GMT. On the other hand, the US gold futures were little changed trading at $1,893.20 per ounce. Howie Lee, an economist at OCBC Bank, said:

“Sentiment is hanging by a thread at the moment… Everybody is quite unsure where the election is headed to, given the number of possible outcomes.”

Provided that there is no Democrat sweep, there might be questions on fiscal stimulus. An uncertain or contested result might favor the dollar and, in turn, weaken gold. Most of the election polls show that Biden has an outright majority countrywide but the race between him and President Trump is quite close in many battleground states.

Analysts and commentators believe that a Biden win may support a bullion rally with his plans to put in possible stimulus aid. Since there is no new fiscal stimulus yet, gold is held back. The stimulus might not happen if Trump is re-elected since it will take more time to negotiate with the Democrats and it will eventually be drawn out as explained by ED&F Man Capital Markets analyst Edward Meir.

Gold is normally seen as a hedge against currency debasement and inflation.

Technical Analysis
On a technical basis, bullion may surge to $1,912 per ounce, as it has cleared a resistance located at $1,887, according to Wang Tao, a Reuters technical analyst.

In the meantime, two major state-owned Chinese banks warned on October 2 that they would move to restrict the trading of precious metals like gold; and foreign exchange products in the case that the election results in explosive market volatility.

The Federal Open Market Committee (FOMC) is scheduled to start its 2-day meeting on November 4 and it is also on many investors’ minds.

On its part, silver gained 0.1% to trade at $24.07 an ounce. Platinum gained about 0.2% o trade at $860.46 while palladium was up by 1.1% at $2,235.88.

The markets are currently in a wait-and-see mode as Americans cast their votes today. Whoever wins these elections, it is almost expected that the markets will react massively.

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