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(Kitco News) – The gold market is starting the week on a solid footing with modest gains following last week’s nearly 4% rally.
December gold futures were last trading at $ 1,955.40 an ounce, up 0.19% on the day.
Gold’s humble gains after the market’s Sunday night opening comes as Democratic candidate Joe Biden continues to secure his seat as president-elect. Although some states did not release their official election tally last week, Biden secured enough votes to win the White House race, according to media reports.
Although Biden continues to solidify his place in history by winning the most votes for any US president, many political experts have said the coming weeks will be filled with uncertainty as President Donald Trump shouldn’t give up without a fight. It has already taken legal action in various states in an attempt to alter the results.
According to many commodity analysts, two factors will continue to support gold prices. First, a Biden presidency – even with a divided Congress as Republicans try to control the Senate and Democrats hold themselves in the House – should lead to further stimulus measures. The second factor is that the ongoing political turmoil will increase the demand for safe-haven gold.
Both of these factors will also continue to weigh on the US dollar as it approaches the two-month low. Analysts have said that the US dollar will be essential to gold’s future path, higher or lower.
“With recounting and lawsuits, we could be months before we find out who will be the next president. I think it will weigh on the dollar. Since there is so much uncertainty in the US, I think you must be in gold,” said Darin Newsom. president of Darin Newsom Analysis, in a recent interview with Kitco News.
Aside from politics, many analysts also predict that economic uncertainty will weigh on the dollar and provide renewed support for gold. Last week there were new records of COVD-19 infections in the United States, more than 10 million people across the country have been infected and health authorities have said that things will only get worse.
Many analysts and economists have said the pandemic will weigh on economic growth ahead of the new year.
Ole Hansen said that with the planned political blockade on Capitol Hill, markets will start looking to the Fed for more leadership on the economy.
“Any new stimulus measures from the Fed will drive gold prices up,” he said. “This looks like the catalyst that could push gold prices to $ 2,000 an ounce by the end of the year.
Not only do analysts see strong fundamental support for gold, but the market has made significant technical moves as prices hold near six-week highs.
Marc Chandler, chief executive of Bannockburn Global Forex, said gold has broken through a significant downtrend line; however, he added that gold’s push to all-time highs remains allusive.
“[Gold is] not quite off-the-race and a $ 2000 rematch. First, it has to break through the $ 1962 area, which is the halfway mark of the decline from the record high in early August and then retracement (61.8%) near to $ 1989.
Murenbeeld & Associates analysts said the lack of a blue wave in the US election has shifted some bullish expectations for gold prices into the new year.
“The election results are not yet well defined, but as things stand, we expect a smaller fiscal package than some (perhaps even the Fed) hoped for, and we expect more pressure on the Fed to review further monetary options in the event the economy is crackling, “analysts said in the company’s weekly report.
The company said it sees gold prices end the year between $ 1,960 and $ 1,980 an ounce.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee this accuracy. This article is for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no liability for loss and / or damage resulting from the use of this publication.
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