Gold Bounces at Key Support Level Ahead of Election Rollercoaster
The gold price has bounced higher in the last two sessions as the U.S. gets set for what will likely be the most controversial election in history. After four years of negative press, a collusion investigation, and impeachment; Democrats finally get their chance to evict President Trump.
The polls are split, with separate predictions of a comfortable win for either side and it’s likely that the result will not go smoothly. This could spur a rally in gold if a contested vote goes to the Supreme Court, leaving traders hanging in suspense and fleeing to safe havens. A sign of nerves could be gold’s 0.70% rise today at the same time the U.S. dollar is up 0.20%.
Gold Exchange Traded Funds (ETFs) have been the beneficiary of large year-to-date investment inflows. The SPDR Gold Trust and the iShares Gold Trust ETF have taken in $21.3 billion and $9.5 billion, respectively. The retail flows have seen gold test new all-time highs around $2,035, but the market since pulled back to the $1,863 level, which also provided support at the 28th September low as the dollar rallied on the belief that a new stimulus package was not coming.
Gold got a bounce as the talk restarted but the ETF flows will have subsided for now. The election, however, will see big money traders watching the news unfold and we could see big moves in the likes of gold and oil, depending on the likely election outcome.
Gold Price Technical Outlook
Gold has bounced at the key $1863 level that I marked weeks ago. This sets up the potential for a move back to the $1930 resistance level. Bullion needs to get above the previous uptrend line and the 50-day moving average first. Traders could go long on a bullish close today with a stop below the day’s low. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.