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Gold Edges Higher, but Rise in Global Equities Caps Gains

Gold futures inched higher on Monday as uncertainty surrounding the U.S. presidential election and expectations for an eventual agreement on a COVID-19 stimulus package prompted prices to hold ground at a roughly three-week high.

Gains for global equities were seen limiting upside for the metal, however.

“The prospect of more U.S. coronavirus relief spending and uncertainty surrounding next month’s U.S. presidential election put a floor under prices,” said analysts at ICICI Bank , in a daily note.

Bullion trading continues to be inspired by uncertainty around the U.S. election contest between President Donald Trump and Democratic challenger and former Vice President Joe Biden, which will take place three weeks from Tuesday.

Fear of a contested election, although seemingly diminishing as Biden’s lead in national polls has widened, has been a big source of concern for investors hedging that the election loser may not quickly concede defeat.

Worries that results may not come out quickly due to measures to limit the spread of the spread of coronavirus also have raised some anxieties.

“Technically gold is regaining strength with the consolidation above $1,920 a supportive signal for bullion and confirming traders’ huge interest,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades, in a Monday note.

December gold was up $1.30, or 0.1%, at $1,927.50, after the most-active contract ended Friday with a roughly 1% weekly gain, according to FactSet data.

Silver for December delivery, meanwhile, was down 3.8 cents, or nearly 0.2%, at $25.07 an ounce, after gold’s sister metal registered a weekly advance of 4.5% last week.

Some investors say that gold has remained buoyant despite the rise in stocks due to the prospects of higher deficits, which would result from Congress passing an additional coronavirus aid package.

Hope for stimulus has inspired equities, viewed as additional support for a rally that has shown some signs of flagging amid fears that a lack of a fresh boost to the economy would lead to a deterioration in the rebound from the worst pandemic in recent memory.

Marios Hadjikyriacos, investment analyst at XM said that a “weaker greenback and massive government deficits are a magical elixir for gold, which stormed back above the $1900 region.”

On Monday, the dollar was up less than 0.1% at 93.102, as gauged by the ICE U.S. Dollar Index, a measure of the dollar against a half-dozen currencies. The index posted a decline last week. Commodities priced in dollars, such as gold, often trade inversely with the dollar, as moves in the U.S. unit can influence the attractiveness of those commodities to holders of other currencies.

Meanwhile, stocks globally were mostly higher Monday as uncertainty surrounding the election results ebbed with polls showing a growing lead for Biden over Trump.

Among other metals traded on Comex, December copper fell by 0.4% to $3.071 a pound. January platinum shed 1.1% to $884.70 an ounce, but December palladium traded flat at $2,463.20 an ounce.

Source: Marketwatch

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