The U.S. elections are just around the corner, and the gold price is one market that reveals the uncertainty surrounding the event. While Biden leads in the polls at the moment, investors cannot forget what happened in 2016 when Trump recovered dramatically and eventually won the White House.
So far, the price of gold moved in a tight, positive correlation with the USD. Lower USD led to higher gold but also to higher EURUSD, GBPUSD, AUDUSD, and lower USDCHF, USDCAD, or USDJPY.
Now that the USD gained a bit across the board, gold gave up some gains too. But moving into the November 3rd, the chances are that gold climbs back towards the higher end of its range so far, spurred by uncertainty.
Elections Uncertainty Keeps the Gold Price Bid
Uncertainty refers to the election’s outcome. That is not necessarily about the White House, but about the Congress and its two Chambers. Who will win what? The outcome of it determines the size of the future fiscal program and the USD direction. Hence, it matters a lot for the gold price.
Gold Price Technical Analysis
The price of gold recovered in the last three weeks from the move below $1,860. At this point, it offers an interesting risk-reward ratio for aggressive bullish traders, providing the recent lows hold.
The chart below shows the U.S. Election Day as the deadline for the move higher. Therefore, aggressive traders should use not only price but also time when going long on the gold market.
Given the uncertainty and the likelihood that the slow price action continues, gold has a chance to recover all the way to $2,000, should we not see a risk-off move in the meantime. As such, bulls will want to remain long while the price holds in the rising channel and to add on the long side on a break above the upper edge. Exit at $2,000 or when time expires, whichever comes first.
Gold Price Forecast