Gold prices drifted lower at mid week’s trading session.
Traders are going short partly on awaited results of the U.S. Senate runoff election and gauging the prospects of further quantitative easing programs.
What you should know: At the time of writing this report, gold futures dropped about 0.33% to trade at $1,947.
Votes are presently being counted in the Georgia election, where two U.S Senate seats are up for grabs.
What this means: Traders are focusing on the outcome of such election results on the bias that it will determine which party will have control of the upper chamber in the U.S congress, and the ease with which President-elect Joe Biden can move his legislative agenda through.
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, spoke on the political macros weighing on gold prices:
“Gold is in a holding pattern ahead of Georgia runoff results.
“Gold continues to trade on the front foot after a roaring start to 2021 for TIPS, which outperformed about everything on Monday and reached new highs.
“It feels like there was a wave of last-ditch efforts effort to have the ‘blue wave’ trade on ahead of a Topsy Turvy Tuesday Senate election runoff in Georgia.”
What to expect: gold traders are anticipating a pause in action today until the election results are released as any disappointment (i.e., no blue wave) there could cause some pullback. However, with a long end of the curve firmly supported by the reflation narrative, gold could remain well supported on dips.