Are election jitters in Georgia excessive? Gold overbought after re-entry shock careful callback!

International spot gold traded in a tight range on Tuesday, hitting a high of $1,1952.22 an ounce, but gains for the day were limited as both bulls and bears battled around the $1,950 mark, showing caution on election day in Georgia. Recently, every time gold fell into overbought conditions after the most feared is the sideways volatility, this is the situation, now the 1950 is an important threshold to touch the $2,000 mark again, I believe the bears will not give up easily.

The American state of Georgia will hold a run-off vote in the Senate race, in a dramatic election that will determine the power of Congress. The Republicans need only one more vote to hold on to the Senate, while the Democrats need two to have any chance of an upset.

But even if Democrats capture the entire Congress, Mr. Biden will likely need varying levels of Republican support in the Senate to accomplish his priorities. Legislation requires 60 votes to pass a Senate filibuster, meaning that even with a Democratic majority, most bills would need Republican support. One exception is the annual budget adjustment process, which Republicans used to pass their tax code with a majority vote in 2017.

There are many, or most, things in Mr. Biden’s economic recovery agenda that Republicans will oppose. The plan includes tax increases on businesses and the wealthiest Americans, as well as clean energy infrastructure projects, likely to be funded with large amounts of public money.

While market sentiment was jittery, analysts noted that the Georgia runoff would only add to the uncertainty of the first week, and that any significant impact from the outcome would be short-lived. Even a big Democratic victory would not change the overall tone of the markets. However, it is still possible that the market could use all this as an excuse to build some positions ahead of the start of the year.

The emergence of safe-haven demand was also supporting ETF buying, with holdings of SPDR Gold Shares up 1.5 percent, the biggest one-day gain since September. This suggests that as we approach 2021, real money flows are supporting the gold story, and technical levels are now supporting it.

Technically, gold’s move above the 1900 and 100-day moving averages has given the bulls temporary control over the price and the prospect of a further rally towards the early November peak of $1960-1965. expects gold to trade between support at $1,928.00 an ounce and resistance at $1,60.00.

Aftermarket outlook:

Hussein Sayed, chief market strategist at FXTM, said the dollar’s decline at the start of the year was also driving gold higher. Georgia’s election will also be critical for the dollar, Sayed noted. Since the Democratic control of the Senate is also giving more stimulus, the dollar will be further weakened. It added: “In a world of extremely high equity valuations, gold will be a must-have asset in a portfolio. It will only be a matter of time before gold is back above $2,000 an ounce, and it would not be a surprise to hit a new high in the first quarter of this year.”

Edward Moya, Senior Market Analyst at OANDA, believes that the New Year will bring more uncertainty, with more stimulus measures, inflation risks and the bursting of the Bitcoin bubble driving gold prices higher.

Another major boost for gold will come from the bursting of the Bitcoin bubble in 2021, Moya noted, noting that the cryptocurrency has been diverting some of gold’s traditional safe-haven inflows since December.

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