The prices of gold rose on Monday despite the stronger of the U.S. dollar. The greenback gained 0.1% against a basket of rival currencies that made the yellow metal more expensive for investors using other currencies. But its impact was overshadowed by the election jitters, which lifted the demand for the bullion.
Spot gold is currently trading at $1,882.46 per ounce as of 0838 GMT.
Democratic presidential candidate Joe Biden’s lead over President Donald Trump continues to grow in the final days of the campaign. He is ahead in three crucial Rust Belt states that Trump won in 2016. Biden leads Trump by ten percentage points in Michigan and Wisconsin and seven points in Pennsylvania. But the incumbent remains competitive in swing states that could be crucial in deciding the presidential race.
Metals Focus’ senior research consultant for South Asia, Harshal Barot, noted a resurgence in demand for safe-haven assets as indicated by the recent advances of gold alongside the dollar. But he does not expect any significant development for the bullion until after the U.S. election.
Phillip Futures’ senior commodities manager Avtar Sandu commented that a Democratic sweep of the Senate and the White House would improve the outlook for a quick and large-scale COVID-19 stimulus package, which in turn would lift the demand for the bullion. Stephen Innes of AxiCorp added that the long-term outlook is bullish because the U.S. will surely roll out a large fiscal stimulus that would dampen the dollar and send the bullion higher.
Meanwhile, the total number of COVID-19 in Europe has passed the 10 million mark yesterday that prompted several governments to impose new lockdowns. In the UK, Prime Minister Boris Johnson ordered a one-month lockdown across England. The UK has an average of more than 20,000 new cases a day and has the highest death toll in the region. In Portugal, Prime Minister Antonio Costa re-imposed partial lockdowns in 121 municipalities that include key regions in Porto and Lisbon. The affected areas are home to around 70% of the country’s total population.
In a related development, the holdings in the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, dropped by 0.1% on Friday on 1,257.67 tons. Also, the U.S. Commodity Futures Trading Commission reported that market speculators lowered their net long position in COMEX gold contracts to 131,609 in the week that ended on October 27.