Gold: A clean sweep for Biden and Dems to trigger a rally

Rising coronavirus cases and election uncertainty have hit gold. The fate of the precious metal hinges on the elections, yet surprise stimulus from central banks could also move XAU/USD, FXStreet's Analyst Yohay Elam reports.

Key quotes

“Gold heavily depends on the election results – for the White House and very much the Senate. Opinion polls are pointing to a handy victory for Biden over Trump. However, Trump may not necessarily accept the outcome and that could cause chaos that would drag markets down and gold with it. Yet even assuming Biden wins, the path higher for gold would be clearer with a blue wave – flipping the Senate.”

“A unified Democratic government would implement a generous, perhaps $3 trillion stimulus package and boost the precious metal. If Biden replaces Trump, but Republicans hold onto the Senate, they could limit the next support package to under $1 trillion. The middle way would be a victory for Trump – he would be able to force the GOP to compromise, citing a fresh mandate.” 

“The Federal Reserve decision could also impact markets this time on Thursday. The Fed is set to leave its policy unchanged and not rock the boat two days after the elections. However, any hint of new bond-buying – to stem the uncertainty resulting from covid – would boost gold. Rejecting any new changes could weigh on it.”

“The Bank of England's rate decision is also worth mentioning. While the BoE has less impact on commodities, it could boost XAU/USD if it surprises by announcing negative interest rates already now. However, the London-based institution has been contemplating the idea for many months. Without signaling, it is imminent.” 

“The US Nonfarm Payrolls report – and its full buildup – may help the precious metal if they disappoint, yet expectations are upbeat. Economists foresee an increase of 850,000 jobs in October, higher than 661,000 in September. In any case, labor statistics play third-fiddle in a week in which the Fed needs to compete for attention against the Fed.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD hits highest since September amid upbeat mood

EUR/USD has surpassed 1.1920, the highest in around 10 weeks as markets cheer the US transition and upcoming vaccines. A busy data day awaits traders ahead of the Thanksgiving holiday. 


XAU/USD stages a modest recovery from multi-month lows

Gold witnessed some short-covering move on Wednesday from the $1800 mark. COVID-19 vaccine optimism might cap any strong gains for the safe-haven metal. Investors now eye US macro data, FOMC minutes for a fresh directional impetus.

Gold news

GBP/USD advances toward 1.34 amid Brexit hopes

GBP/USD is rising toward 1.34 after EC President von der Leyen said there is progress in Brexit talks. UK Chancellor Sunak's speech and US data are awaited later in the day.


WTI rally continues despite large US inventory build

Oil has climbed to fresh multi-month highs, extending Tuesday's price gains as optimism emanating from potential coronavirus vaccines overshadows inventory build-up in the US. The API reports a large buildup of inventories in the weeke ended Nov. 20.

Oil News

Black Friday 2020 Discounts!

Learn to trade with the best! Don't miss the most experienced traders and speakers in FXStreet Premium webinars. Also if you are a Premium member you can get real-time FXS Signals and receive daily market analysis with the best forex insights!

More info