Gold traders remain cautious on Tuesday in anticipation of news from polling stations in the United States. The incumbent leaders of the Republican White House, Donald Trump and Democrat Joe Biden, are competitors in the presidential race. According to national polls, Biden is now the king of American sympathy, but the situation remains unclear in some states. Traders are worried that the winner’s decision could be indefinitely postponed.
The December gold futures price on the New York Stock Exchange Comex rose by 0.02 percent, or 0.45 dollars, as of last check, to 1892.95 dollars per troy ounce. Silver futures for December gained 0.5% to $24,152 an ounce.
“At the moment, the mood is hanging in the balance. Everyone is absolutely uncertain of what the election will lead to,” said Reuters OCBC Bank economist Howie Lee. At the same time, the analyst noted that the uncertain result of the election would help the dollar and weaken gold in the short term.
The lack of new financial incentives for the U.S. economy is also placing pressure on gold, Edward Meir, an analyst at ED&F Man Capital Markets, noted. The implementation of a new stimulus package could drag on if Trump is re-elected.
At last check on the day, the euro-dollar exchange rate increased from the previous close of $1.164 per euro to $1.1696, while the dollar against the yen dropped from 104.71 yen at the last close to 104.69 yen. The dollar index (the dollar rate against the basket of currencies of the six major trading partner countries of the United States), dropped by 0.53 percent, to 93.63 points.
Investors are hoping rise in the value of equity assets in relation to the inevitable onset of certainty coming with the finalization of U.S. presidency and withdraw from the U.S. currency that was used days earlier as a “shelter.” Furthermore, analysts quoted by Reuters suggest that the victory of Biden (which is most likely as per the polls) will weaken the dollar, as he is expected to spend a lot of money to boost the economy and choose a foreign exchange devaluation strategy to increase trades.
Furthermore, Commerzbank analyst Antje Praefcke told Reuters thateven unrest in the US which could cause the market to sell dollars cannot be ruled out. We can only do one thing: fasten our seat belts, put on our helmets and wait for EUR/USD pair for what will happen in the coming days.