Gold prices recorded one of its biggest break out this year, as it gained about 3%, and the U.S dollar plunged to a record low.
The sudden surge in gold prices is coming on reports that the U.S. presidential election might soon have a winner who will work on issuing a robust stimulus deal for COVID-19 relief.
What we know:
At the U.S trading session on Thursday, the precious metal at the futures market traded above $1947/ounce, showing a gain of 2.7% Spot gold, which reflects real-time trades in bullion, traded around $1,944.50/ounce with a percental gain of about 2.2%.
The recent U.S. election has yet to decide if President Trump gets elected or if his Democrat challenger, Joe Biden, will become the 46th United States President.
- The Dollar Index, which is used to track the greenback’ strength against six major global currencies dropped about 0.8% at 92.695.
- The precious metal is a hedge against the U.S dollar and any weakening in the currency value usually sends gold prices pushing up.
What this means
Gold traders are presently going long on the anticipation that the incoming U.S. administration, regardless of who is in power, will soon have to issue a stimulus relief for a fragile economy battered by the COVID-19 pandemic.
However, a split Congress/Senate could worsen those efforts, as seen in the results already trooping in. Quantitative easing measures usually boost gold prices.