· Gold dips on dollar bounce as investors see U.S. election race tighten
Gold fell on Wednesday as the dollar strengthened after U.S. President Donald Trump grabbed an early lead in the key state of Florida, muddying the path for his Democratic rival Joe Biden.
Spot gold fell 0.6% to $1,896.44 per ounce by 0358 GMT, having earlier shed as much as 1%.
U.S. gold futures fell 0.7% to $1,897.10.
“The market is losing confidence in a clear run to a Biden victory at the moment ... We have seen the Biden trade unwind and a big effect of that is that we have seen the dollar strengthen,” said IG Markets analyst Kyle Rodda.
Trump was leading Biden in the vital battleground state of Florida on Tuesday, while other competitive swing states that will help decide the election, including North Carolina, remained up in the air.
Investors were initially limbering up for a win for Biden, who was expected to inject the market with potentially large stimulus measures to help weather the economic fallout from the Covid-19 pandemic.
“I think the odds of a clean sweep are diminishing, almost by the minute.
That reduces the possibility, or the likelihood at least, of a large stimulus program being agreed to in the first days of a Biden administration,” said Matt Sherwood, head of investment strategy at Perpetual in Sydney.
Gold has gained about 25% so far this year on the back of unprecedented global stimulus amid the Covid-19 pandemic since bullion is considered an inflation hedge.
The dollar was up 0.7% against a basket of major currencies.
“Gold has faded ahead of resistance at $1,912 and is suffering as it appears Trump will hold the key swing state of Florida,” said Jeffrey Halley, senior market analyst at OANDA, predicting a “choppy $1,890 to $1,920range” in the morning session.
· Jim Cramer: Gold is flashing signs ‘you want to see in a chart’
Investors may have an opportune time to start a position on gold or gold securities as the precious metal could be on an upswing, CNBC’s Jim Cramer said Tuesday.
After reviewing chart analysis from Carolyn Boroden, a commodities expert and Fibonacci analyst, he suggested that bullion, the SPDR Gold Shares, or GLD, exchange-traded fund and Barrick Gold are ripe for holding.
“The charts, as interpreted by Carolyn Boroden, suggest that gold prices could have a lot more room to run and that certainly fits with the current backdrop that we see in the news,” the “Mad Money” host said.
Gold investments can serve investors as insurance against inflation and general economic chaos, Cramer said.
Gold futures have risen about 25% year to date, and the price for the precious metal is down 8% from its peak close in early August. It rose about 17 points to $1,909.70 as of Tuesday afternoon.
While looking at the weekly chart of the continuous gold futures, Cramer noted that Boroden, who launched FibonacciQueen.com, forecasts that gold is still on a long-term uptrend as long as it stays above its September lows under $1,870.
The higher highs and higher lows is “exactly what you ant to see in a chart,” Cramer said.
Boroden sees a scenario where the price of gold could rally double digits to new highs of $2,153 if it can stay the September low, and she believes it has already placed a bottom, the host explained. She also sees two key resistance levels of $1,910 and another $1,920.
“Clear these two hurdles, along with the October high at $1,939 … [it could] be really smooth sailing,” the host said. “As long as the precious metal hangs in above the mid-1800s, call her a buyer. I think she’s going to be dead right.”
· Silver fell 1.6% to $23.77. Platinum dropped 0.9% to $858.77 and palladium was down 0.4% at $2,274.83.
Reference: CNBC
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