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Gold Retests $1,900 As Investors Anticipate 72 Hours of Volatility

November 2, 2020 at 20:06 by Andrew Moran

Gold futures are retesting $1,900 to kick off the trading week as investors anticipate 72 hours of heavy volatility, driven mostly by the US presidential election on Tuesday. The electoral results will also have broader implications for the stock market, the US dollar, and metal commodities. How will gold react following Election Day?

December gold futures surged $15.40, or 0.82%, to $1,985.30 per ounce at 18:43 GMT on Monday on the COMEX division of the New York Mercantile Exchange. Gold prices are coming off three consecutive weekly losses, as well as an October decline of about 1.2%. Year-to-date, gold is still up close to 25%

Silver, the sister commodity to gold, returned to the $24 range on Monday. January silver futures rose $0.494, or 2.09%, to $24.14 per ounce. The white metal slipped more than 4% last week and ended the month 1% lower. So far this year, silver is still up 35%.

Financial markets have had a hard time trying to trade the 2020 election. It is not so much uncertainty over the results, which will likely not be announced until later in the week. But rather it is how to trade a President Donald Trump administration or a Joe Biden presidency. Everything from stocks to energy to metals, investors cannot seem to price anything in this week.

For now, it is believed that a Biden win would rev up stocks because it would likely lead to more fiscal stimulus. A Trump victory would mean lower taxes and a continuation of a pro-business agenda.

The final Wall Street Journal/NBC News poll published on Sunday showed Biden with a ten-point lead over Trump.

Meanwhile, the coronavirus pandemic lingers in the background, but it is not having much of an impact on gold prices. In the US, single-day confirmed infections hit close to 100,000. Overseas, the British government reinstituted lockdown orders. Other European jurisdictions are reintroducing COVID-19 restrictions, from shutting down restaurants to imposing curfews.

That said, government spending, money-printing, low interest rates, and vulnerability in the global economic recovery will continue to be the norm heading into 2021. As a result, the consensus is that gold is the best asset to hold in your portfolio.

A modest rise in the greenback is limiting gold’s ascent to start the trading week. The US Dollar Index, which measures the greenback against a basket of currencies, rose 0.09% to 94.12, from an opening of 93.89. The index has trimmed some of its 2020 drop in recent weeks as it is down a little more than 2%. A stronger buck is bad for dollar-denominated commodities because it makes it more expensive for foreign investors to purchase.

In other metal markets, December copper futures picked up $0.04, or 1.31%, to $3.0875 a pound. December platinum futures tacked on $13.90, or 1.64%, to $862.30 an ounce. December palladium futures jumped $7.70, or 0.35%, to $2,224.89 per ounce.

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