Gold dips as investors await U.S. election outcome
· Gold prices edged down on Tuesday, as cautious investors awaited the outcome of the U.S. presidential election with President Donald Trump closely trailing Democrat Joe Biden in national opinion polls.
· Spot gold fell 0.1% to $1,892.73 per ounce by 0533 GMT.
· U.S. gold futures were little changed at $1,893.20 per ounce.
· “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,” said Howie Lee, economist at OCBC Bank.
· As long as there isn’t a Democrat sweep, there will be questions on fiscal stimulus, while an uncertain or contested result will likely favor the dollar and weaken gold, he added.
· Election polls show Biden with an outright majority nationally but the race between both him and Republican candidate Trump remains close in several battleground states.
· Analysts say a Biden win could help the bullion rally with his plans to inject a potentially large stimulus aid.
· The fact that there isn’t a new fiscal stimulus is holding gold back and it may not happen if Trump gets re-elected because it will take time to negotiate with the Democrats and it will just be drawn out, said ED&F Man Capital Markets analyst Edward Meir.
· On the technical front, bullion may rise to $1,912 per ounce, as it has cleared a resistance at $1,887, according to Reuters technical analyst Wang Tao.
· Meanwhile, two major state-owned Chinese banks warned on Monday that they could restrict trading of precious metals and foreign exchange products if the U.S. election fuels market volatility.
· Also on investor’s minds, the Federal Open Market Committee (FOMC) will begin its two-day meeting on Wednesday.
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· Gold price ahead of U.S. election: 'We cannot be certain of a clear result on Wednesday' - StoneX
Markets might not get clear results from the U.S. election on Tuesday, according to StoneX.
After all the electoral votes have all been cast on Tuesday, it is not a given that markets will receive a clear answer on the night of or even on the next day, said Rhona O’Connell, StoneX head of market analysis for EMEA and Asia regions.
“The coming days may well see a contested U.S. election and it is possible that postal votes will take time to count so we cannot be certain of a clear result on Wednesday,” O’Connell said on Monday. “This would almost certainly keep gold steady for a while at least.”
“Gold has unwound its oversold position of late last week and is moving up to test dual resistance at $1,900 from the [10-day 20-day] moving averages. Some support from a Fibonacci retracement at $1,873,” O’Connell pointed out.
· Silver rose 0.1% to $24.07 an ounce. Platinum gained 0.2% to $860.46 and palladium was up by 1.1% at $2,235.88.
Reference: CNBC, Kitco
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