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Gold Prices Wilt as Virus Spike Spurs Haven Demand. Biden Leading in Polls

2020 Election, Gold Prices, Coronavirus Cases, Election Day – Talking Points

  • Gold prices may decline if rising Covid-19 cases stoke demand for haven-linked USD
  • Democratic nominee Joe Biden continues to lead in the polls with his 7-point average
  • XAU/USD price action turning more bearish; is the uptrend in danger of invalidation?
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8 DAYS UNTIL THE US PRESIDENTIAL ELECTION

It is almost exactly one week until election day and the polls continue to indicate that Democratic nominee Joe Biden will take the White House. According to RealClearPolitics, the former Vice President is almost 8 points ahead of incumbent President Donald Trump. This figures falls in line with the rough 7-point average Mr. Biden has held for several months apart from a few brief interims of polling convergence.

2020 US Election Polls

Chart showing polling data

Source: RealClearPolitics

Virus Spike Souring Sentiment

Coronavirus cases around the US and world are dramatically spiking and bringing to light the much-dreaded premonition of a second wave hitting the globe in Autumn. With Congress locked in a bipartisan stalemate, lack of progress in fiscal stimulus negotiations has undermined confidence in economic stabilization and soured risk appetite.

Over the past few days, equity markets have plunged while demand for the haven-linked US Dollar surged. In the process, the allure of anti-fiat hedges like gold fell as future inflation expectations dwindled. Looking ahead, the prospect of reimposed lockdown measures and more severe restrictions could be another election wildcard that investors have to contend with.

Gold Price Outlook

Gold prices may be on the verge of breaking a multi-week uptrend as swelling risk aversion from a spike in Covid-19 cases puts a premium on the US Dollar. This has come at the expense of the comparatively less-liquid precious metal which previously rose amid signs of economic stabilization and optimistic expectations of inflation. \

Gold Prices – Daily Chart

Chart showing gold prices

XAU/USD chart created using TradingView

If the slope of appreciation is invalidated, immediate support may be found at 1875.70 where selling pressure may briefly abate. However, if that floor is also broken, the next level to be tested may be the inflection point at 1810.33.

— Written by Dimitri Zabelin, Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or@ZabelinDimitrion Twitter