- Gold is on the verge of a rally to 2,000, especially if the US election tension spills into next week.
- Support at 1,950 is key to ensuring that buyers keep their eyes on the ultimate prize, 2,000.
Gold rallied significantly this week amid tension regarding the United States 2020 presidential election. The precious metal closed the week at 1,952, the highest level since September. Price action above 1,900 was attributed to the market's anxiety as investors took positions to hedge against the expected volatility in the stock market. Most analysts believed that if Biden wins, the stock market was bound to crash.
At the moment, the election is leaning towards Biden, who proclaimed earlier on Saturday that the Democrats would ace this race. However, it is too soon to call the election in his favor, as several states are yet to release the final results. On the other hand, some states are contemplating recounting the votes.
It seems that the following week would also be an action-packed one for gold as it is likely to continue gaining ground against the USD. The daily chart illustrates how XAU/USD recently broke out of a descending wedge, elevating the price above the 100 Simple Moving Average and the 50 SMA.
Potential support at 1,950 will play a key role in ensuring that bulls remain focused on higher levels, such as 2,000. The Relative Strength Index implies that odds will still be in favor of the bulls come Monday.
XAU/USD daily chart
It is worth mentioning that gold's bullish outlook will be invalidated if the support anticipated at 1,950 fails to hold. On the downside, the immediate contact would be the 50-day SMA, but if declines extend, 1,900 could be retested before gold rebounds.
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