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Gold Rebounds to End October, Poised for Monthly Loss

October 30, 2020 at 18:23 by Andrew Moran

Gold futures rebounded to finish the trading week, but their gains were not enough to avoid recording a monthly loss. A strengthening US dollar, a lack of a fiscal stimulus bill, and a spike in coronavirus cases contributed to the yellow metal’s drop in October. With the presidential election days away, how will gold perform in November?

December gold futures picked up $11.30, or 0.6%, to $1,879.30 per ounce at 18:04 GMT on Friday on the COMEX division of the New York Mercantile Exchange. The yellow metal suffered a 1.25% weekly decline, as well as a 1.3% decrease in October. Year-to-date, gold prices are still up about 24%.

Silver, the sister commodity to gold, also ended the trading week higher. December silver futures surged $0.275, or 1.18%, to $23.635 per ounce. The white metal did slide 4.3% this week, adding to its monthly slump of 1%. So far this year, silver prices remain up 32%.

Gold, traditionally a safe-haven asset in heavy demand during times of chaos and uncertainty, has failed to find support throughout any of the turbulence, from the resurgence in COVID-19 cases to rampant price inflation from the Federal Reserve. Investors might not be convinced of inflation until the federal government agrees to another round of a coronavirus-related stimulus and relief bill, which could only come in the form of a Joe Biden presidency.

With the US central bank relatively quiet, and Fed officials urging fiscal stimulus, the consensus is that the Eccles Building has abdicated its responsibility to rescue the world’s largest economy in the fallout of the public health crisis.

But a rising greenback may have been the ultimate factor for the metal commodities’ disappointing performance this month. The US Dollar Index, which gauges the greenback against a basket of currencies, rose 0.1% to 94.05, from an opening of 93.92. The index is poised for a weekly surge of 1.4%, as well as a monthly jump of 0.23%. Over the last three months, the DXY has gained 0.75%. Still, year-to-date, the dollar is down 2.5%. A stronger buck is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.

On the data front, better-than-expected numbers led to gold paring some of its gains. Personal income rose 0.9% in September, while personal spending advanced 1.4% last month. The University of Michigan’s consumer sentiment index climbed to a pandemic-high of 81.8, while consumer expectations also skyrocketed to 79.2.

On Tuesday, Americans are going to the polls, and nearly all the measurements suggest former Vice President Joe Biden will defeat President Donald Trump in a landslide. The broader financial markets seem mixed on a potential Biden administration, but it might be a boon for gold and silver since his administration would lead to a dramatic spike in spending.

In other metal markets, December copper futures dipped $0.008, or 0.28%, to $3.048 a pound. December platinum futures fell $2.90, or 0.34%, to $846.60 an ounce. December palladium futures declined $11.40, or 0.52%, to $2,209.89 per ounce.

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