Gold investment: Perfect storm approaching! Election results may be delayed or even disputed. Gold on track to break through 1940?

Wednesday is a pivotal day for the world, as the presidential election comes to a head and who will take the White House for the next four years will be revealed. Before this, Asian market intraday spot gold short – term retreat, now traded around 1890, silver turned down near the $24 mark.

Polling stations will close from 6pm to 1am US Eastern time (7am to 2pm Beijing time), depending on time zone. The states vote as they count, and the results normally come on election night, but this year they could be delayed by a surge in mail-in ballots and the likelihood that Mr. Trump will not concede easily.

Investors are hesitant to trust polls, most of which failed to predict a Trump victory in 2016.

Democratic candidate Joe Biden currently leads Trump in national polls, but the two RACES look close in key states and Trump could still reach the 270 votes needed to win the electoral College.

Analysts said the outcome most likely to cause volatility in the short term would be no clear winner on Tuesday night.

Erik Nelson, macro strategist at Wells Fargo in Nelson, said: “The risk aversion we saw last week was quite widespread and I think it makes a lot of sense; After what happened four years ago, it is natural to be sceptical about any kind of prediction about the election. The closer the election gets, the more likely there is to be a delay or a dispute. It’s a perfect storm for a fall in risk assets.”

At a campaign event in Pennsylvania, Mr Trump said he would not rule out sending lawyers to challenge the decision if states continued to accept mailings after the November 3 count. Local election officials say postal ballots may still be accepted and counted up to three days after the election.

Meanwhile, Campaigning in Pennsylvania, Mr Biden’s campaign manager, Jennifer O ‘Malley Dillon, hit back, saying it was normal for states to take longer to count votes. She does not think Mr Trump will be able to declare victory on election Day night. Biden said American voters have a big decision to make.

“We expect volatility to increase in the next 72 hours,” said Phillip Streble, chief market strategist at Blue Line Futures. So people are looking at gold and silver as a hedge.”

“If the outcome is unclear, gold will go back to $1,940 an ounce,” Streible said. But whichever candidate wins, there is the potential for continued stimulus, with central Banks expanding their balance sheets and interest rates set to stay low for an extended period.”

Technical analysis:

The dollar

On the daily chart, the U.S. dollar index.DXY is now trading near the 94 level after a four-day rally. The daily MACD red momentum column gradually expanded and the KDJ random index hit an overbought level upwards, indicating that short-term bullish momentum is firm, but the rally may slow or even stop.

On the 4-hour chart, the dollar index rebounded strongly to hit 94.28 before easing back slightly to focus on 93.90 support. The MACD green momentum column appeared initially, with KDJ random indicators trending down from the overbought level, indicating that bearish momentum is emerging for the dollar and a short term or pullback lower.

gold

On the daily chart, gold, which had rallied for two straight days, is trading around $1,890. The daily chart MACD green momentum column remains weak, with the KDJ random index rebounding from oversold levels, indicating that gold bearish momentum is not strong and is currently prone to volatility.

The 4-hour chart shows gold rising after hitting a low of $1,858, with the rally ending at $1,898 and the focus on whether the 1900 level can be broken. The MACD red momentum column begins to weaken and the KDJ random index hits an overbought level upwards, indicating a short term or pullback in gold.

silver

The daily chart showed silver back near the $24 mark after a two-day rally, looking to find its footing and now trying to hold firm. The MACD green momentum column on the daily chart, with KDJ stochastic trying to rebound from below the 50 level, indicates bearish momentum is still in place for silver or further volatility.

The 4-hour chart shows silver’s V-shaped rally after hitting a low of $22.58 and ending at its 200-day moving average of $24.25. The MACD’s red momentum column began to weaken and the KDJ random index hit overbought levels, indicating silver’s bullish momentum is slowing or facing consolidation.

Fundamentals positive factors:

  1. The surge in the number of coVID-19 cases worldwide also weighed on market sentiment. The NUMBER of new coronavirus cases continues to climb in the U.S., while the cumulative number of confirmed cases in Europe surpassed 10 million on Sunday. — Risk aversion triggered by the worsening epidemic is good for gold.
  2. U.S. stocks tumbled on Friday, with the Dow dropping nearly 500 points and the Nasdaq dropping more than 3%. The Dow Jones Industrial Average closed down 157.50 points, or 0.59 percent, at 26501.60. The S&P 500 closed down 40.10 points, or 1.21%, at 3,270.04. The Nasdaq Composite index closed down 274.00 points, or 2.45%, at 10911.59. — Falling U.S. stocks spark risk aversion, supporting gold.
  3. At least 91,248 new confirmed coVID-19 cases were reported in the United States on Thursday, according to Reuters, the largest single-day increase since the outbreak began. Since the coVID-19 outbreak began, the United States has had more than 8.94 million confirmed cases of COVID-19, ranking first in the world. — Risk aversion triggered by the worsening epidemic is good for gold.

Fundamentals negative factors:

  1. In a letter to Treasury Secretary Steven Mnuchin on Thursday, House Democratic Leader Nancy Pelosi said she was still waiting for answers from Mr. Mnuchin on some points of disagreement. The White House dismissed Ms Pelosi, saying she had no intention of backing down. Mr. Mnuchin, responding to Ms. Pelosi’s letter on Thursday, said that Ms. Pelosi had used a “political gimmick” during the negotiations to pursue an all-or-nothing negotiating approach. — The pre-election stimulus package is bearish for gold.
  2. The U.S. Commerce Department released figures for U.S. GROSS domestic product (GDP) in the third quarter, which grew at an annualized rate of 33.1 percent, the best on record. — Better-than-expected U.S. GDP boosts risk sentiment and bears gold.
  3. Global gold demand fell 19 per cent year-on-year to 892 tonnes in the third quarter of this year, the World Gold Council said today in its gold demand trends report. That was the lowest quarterly aggregate demand since the third quarter of 2009. — Falling demand for gold is bad for gold prices.

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