Insights – Gold gaining on the US dollar ahead of the US election

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October 21, 2020

Gold market update

Gold rose about 1% on Monday as the dollar retreated and expectations for a U.S. stimulus deal ahead of the November 3 presidential elections bolstered bullion’s appeal as an inflation hedge.

Spot gold rose 0.5% to $1,908.22 per ounce. U.S. gold futures rose 0.2% to $1,910.40.

Gold is strengthening on the dollar’s downtrend and “the belief that some kind of stimulus package is going to come through in the next 48 hours,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

“People believe that we’re going to go into an inflationary period into the next quarter. So they’re starting upfront on that.”

The dollar slipped 0.5% versus rivals, making gold less expensive for holders of other currencies.

Gold has gained about 26% so far this year as investors sought refuge from a worsening coronavirus pandemic, and risks of inflation and currency debasement as global central banks slashed interest rates while pumping out unprecedented stimulus to contain the economic blow.

Further underpinning safe-haven demand for bullion were concerns surrounding fresh coronavirus-led restrictions in Europe and elsewhere as worldwide infections crossed over 40 million, as well as uncertainty over the U.S. elections.

Gold price this month in AUD/OZ

US dollar

SendGold Viewpoints

Positioning with gold for election uncertainty

This week we discuss the potential uncertainty around the U.S. election and how it is likely to affect gold prices: https://www.sendgold.com/positioning-with-gold-for-election-uncertainty/

Gold in the News

Here are a few articles trending on the subject of gold.

ANZ Bank’s Chief Economist Richard Yetsenga discusses the bank’s recent call for gold prices to hit USD $2300 in the near term (AUD $3285 at current exchange rates, up from the current AUD price of $2690): https://www.cnbc.com/video/2020/08/06/gold-may-hit-2300-per-ounce-in-three-to-six-months-anz.html

Investment bank UBS gives their three reasons investors should look to gold after the recent price consolidation:
https://www.businessinsider.com.au/gold-price-investors-buy-election-strategy-reasons-why-presidential-ubs-2020-9?r=US&IR=T

Oxford Gold Group give a useful summary of the scenarios affecting the gold price in a recent article entitled “Gold, The Simple Math”: https://www.oxfordgoldgroup.com/news/gold-the-simple-math/

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