The yellow metal was arbitrarily up at Thursday’s trading session, as it appeared increasingly likely Joe Biden would become the 46th U.S. president.
What we know: Gold futures were up over 0.60% to trade at around $1,908/ounce, it’s critical to note that the selling pressure seen in the U.S dollar index market is also making gold more attractive to buy.
What this means: The U.S. elections result currently shows that Democrat Joe Biden has 264 of the needed 270 electoral college votes, according to data seen from Bloomberg, and is just in need of 6 votes from states where the results are too close to predict a clear winner.
- The prevailing outcome is bullish for gold, as a Democrat president is expected to push for a more robust COVID-19 stimulus deal, which will in turn push the precious metal prices upward.
However, the bullish bias on gold is capped by the failure of a so-called Blue Wave to appear, meaning that Democrat will control the Presidency, House of Representatives, and Senate seems to be a tall order.
“It’s just illiquidity breeding illiquidity and I really don’t think that will come back properly until the political situation is resolved … It’s hard to take a long-term view on something that will grind on and on.” Darius Tabatabai, Head of Trading at Arion Investment Management Ltd, told Bloomberg.
Also adding fuel on gold’s rally are reports that President Trump is moving to contest the results in states that he lost with slim margins. Thereby, leading to macros that the outcome might be delayed longer than expected and increase the disconnect between America’s major parties in supporting the U.S economy.