Gold Prices Rise as Joe Biden Approaches the White HouseBy Paloma Duran | Fri, 11/06/2020 - 17:24
Gold prices have been rising due to US election uncertainties, reported to Reuters. This week, the yellow metal had its best week since July, as Biden’s chances increase and following the implementation of a greater economic relief bill.
Currently the gold price stands at US$1,951.20/oz. According to Reuters, gold is a hedge against a possible inflation caused by the unprecedented money printing that will seek to help the economy recover.
Gary Wagner, Editor of Gold Forecast.com, said gold price will benefit regardless of who wins the presidency. Nevertheless, in the short term, gold prices will face a lot of pressure. According to Rhona O’Connell, StoneX Analyst, Biden reaching the White House would make the dollar weaker due to additional spending on the stimulus package and other national policies.
Chantelle Schieve, Head of Research at Murenbeeld & Associates, said stabilization of gold prices at US$1,900/oz indicates that investors are still waiting for the election results. Schieve mentioned that in case the election process ends up in court, it could be months before any resolution can be achieved, which could bring a prolonged period of uncertainty that would benefit the price of gold.
Kitco reported that the presidential election will also define which stimulus measures will be implemented to save and improve the national economy. If President Trump is reelected, he will pass a fiscal stimulus package of US$1.8 trillion, despite the government’s efforts to implement a US$2.2 trillion aid package. On the other hand, if Biden wins, the fiscal spending will be higher due to democratic policies.
Greg Harmon, Founder of Dragonfly Capital, said in an article by Kitco hat the current election results show a potential inflation and, as a result, there is a higher potential for gold prices to rise from US$1,950 to US$2,900. He mentioned that even if Biden has a divided Congress, the implementation of a greater stimulus package will be negative for the dollar and positive for gold.