Price of Gold Fundamental Daily Forecast – Concerns Over Election Results Generating Short-Term Selling Pressure

Gold futures are trading lower on Thursday, pressured by a stronger U.S. Dollar as traders seek protection in the greenback ahead of the November 3 U.S. elections. Traders are also buying the dollar as a hedge against weaker risky assets on concerns over rising COVID-19 cases that threaten the global economic recovery.

At 12:23 GMT, December Comex gold futures are trading $1866.10, down $13.10 or -0.70%.

Gold lost a lot of its recent short-term momentum when Republicans and Democrats failed to reach an agreement on a new fiscal stimulus package. A new deal would’ve weakened the U.S. Dollar, and driven up dollar-denominated gold.

After that deal fell apart, traders quickly shifted their focus on the elections. Although Democratic challenger Joe Biden is leading President Trump in the polls, investors aren’t taking any chances with a surprise outcome and trimming long positions in speculative assets. They’re also moving the proceeds into the dollar, which is putting pressure on gold prices. This trend is likely to continue until at least the election, but could extend well beyond that date if the presidential election results are contested by President Trump.

Longer-term, gold prices remain well supported by the accommodative central banks. Earlier today, the Bank of Japan held policy steady and talked about more stimulus. The European Central Bank (ECB) is also expected to hold off on any new support measures today and likely hint at more accommodative action in December.

Traders are also monitoring the resurgence in the number of coronavirus cases in the United States and China that is threatening the global economic recovery. At this time, the dollar is benefitting from safe-haven inflows as German and France imposed fresh lockdowns to stem a second coronavirus wave, but over the long-run, a second wave of infections would likely benefit gold because it would increase the need for fiscal stimulus from the government and monetary stimulus from the central banks.

Daily Forecast

Unless there is a sudden reversal to down by the U.S. Dollar, gold is likely to remain range bound over the next four to five trading session.

For a look at all of today’s economic events, check out our economic calendar.