(Bloomberg) – Gold rose as the dollar trimmed some of its gains in recent days before next week’s pivotal US presidential election.
Uncertainty remains high ahead of the November 3 vote, raising the dollar’s appeal as a safe asset on bullion while renewed coronavirus cases in the United States and Europe. The spread of Covid-19 is increasing in the United States, with new cases crossing 86,000 to set a new daily record. In Europe, countries have begun imposing new restrictions in an attempt to stem the crisis.
Since setting a record in August, gold’s advance has faltered, as prices have lost their upward momentum as investors question whether bullion has rallied so much and too quickly. However, holdings in ETFs remain close to an all-time high. Standard Chartered Bank said the overall backdrop for gold remains favorable, and there could be more upside if Joe Biden defeats Donald Trump in the presidency and the Democrats take control of the Senate.
James Steele, chief precious metals analyst at HSBC Securities (USA) Inc. , In a note, that with the escalation of Covid-19 concerns and next week’s US presidential election, gold and silver “will be very volatile”.
“Increases in risk aversion sentiment tend to support the dollar, which weakens gold and silver,” Steele said. “But we think this will only go that far.”
In the long term, gold will be supported by the ECB’s monetary policy as it is expected to extend stimulus measures to the economy, according to Commerzbank AG analyst Daniel Pressman.
“We do not expect a further decline in the price of gold,” Bresman said. “It is likely to encounter headwinds from the currency side in the coming weeks.”
Spot gold was up 1%, trading at $ 1,885.83 an ounce at 12:55 pm in London, after closing Thursday at the lowest level since September 25. Silver was up 1.6%, platinum was up 1.2%, and palladium advanced 1.3%. The Bloomberg Dollar Index was on course for a 0.9% gain this week.
In the United States, there remains a dead end over the stimulus talks, but there are signs that Europe will talk about measures to support the economies affected by the virus. Treasury Secretary Stephen Mnuchin accused House Speaker Nancy Pelosi of “political trick” by refusing to make concessions. Meanwhile, European Central Bank President Christine Lagarde said there is “little doubt” that policymakers will approve a new package in December.
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