Gold price surged more than 28% so far this year and hit a new all-time high of $2,074 in August. This year the gold price rally has been driven by a combination of rising coronavirus cases, weakness in the USD, lower interest rates, major geopolitical events such as the tensions between the US and other countries such as North Korea, China, and Iran, and the US election uncertainty.
With just a few days to go before the US presidential election, gold price trades slightly lower. The price dips from the top amid a slightly stronger dollar, as investors continued to follow developments around a fresh US fiscal stimulus. At the moment it appears that Democrats and Republicans are unlikely to agree on a stimulus deal before the November 3 election. Meanwhile, the Federal Reserve Governor, Lael Brainard, said that another stimulus is critical for the economy, as it might be forced into a slower and weaker recovery from the coronavirus, without more aid.
During the last week, the precious metal started on a positive note and climbed to a fresh weekly high of $1931 on signs that US lawmakers could agree on a new stimulus package before the November 3 election. But later the yellow metal failed to break above October highs and retreated back to below the $1900 psychological level following strong US economic data and amid continuing uncertainty over U.S. coronavirus stimulus.
Short-term and long-term technical outlookLooking at the gold from a very short-term perspective, it is evident that the metal just broke below its short-term support line. In the short term if the price breaks below 1880 which would open doors towards $1860 and below that $1845 is next. On the upper side, the first immediate resistance can be found in $1920 and then 1935/50.
The below chart plots the long-term view of Gold. Technically the overall movement remained bullish for the gold. The key level remains this year August high as a break above would increase the potential of an extension towards $2500 over the coming months. On the flip side, if the price break below the $1848 level the next support to watch $1810 and $1770.
ConclusionUS Presidential election will be an important focus and will certainly have a significant impact on gold prices. The other big question is Where could gold prices go after the election? As per the recent polls, the former Vice President Joe Biden still maintains his lead over President Donald Trump in the presidential race, but the race is much closer in the battleground states that will decide the election.
For this week, the main drivers for the precious metal remain the US stimulus negotiations, central bank meetings, the resurgence of coronavirus cases, and the movement of the US dollar.
“From a strictly economic point of view, buying gold in a major inflation and holding it probably presents the least risk of capital loss of any investment or speculation” – henry Hazlitt.
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