The prices of gold inched higher on Monday because of the political uncertainty created by the upcoming U.S. presidential debate between incumbent Donald Trump and his Democratic opponent Joe Biden. The yellow metal was also supported by the slight weakening of the dollar, which fell around 0.2% against a basket of rival currencies today after hitting close to a two-month high last week.
Spot gold is currently trading at $1,854.38 per ounce as of 0825 GMT.
AxiCorp’s chief market strategist Stephen Innes said gold prices will be influenced by the movement of the dollar and a big move could come after the presidential debate.
The market is also monitoring developments on the second round of the COVID-19 stimulus package after House Speaker Nancy Pelosi said yesterday that they are close to reaching a deal with the White House. An agreement between the White and Democratic legislators would benefit gold. The unprecedented stimulus measures rolled out by governments and central banks around the world have pushed gold prices by more than 20% so far this year.
Meanwhile, the U.S. economy appears to be slowly recovering from the impact of the pandemic. New orders for American-made capital goods in August grew higher than expected and shipments reached close to a six-year high.
In physical trading, gold dealers in India reduced their discounts to the lowest level in six weeks after a price decline lifted the demand for the precious metal in major Asian hubs. On the technical front, Reuters’ technical analyst Wang Tao predicted that the bullion might break the support price level at $1,855 an ounce.
In a related development, the U.S. Commodity Futures Trading Commission reported that market speculators lowered their bullish stance in COMEX gold contracts in the week that ended on September 22. Also, the holdings of the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, dropped by 0.02% last Friday, which reflects market sentiments.