Gold moved higher in Asian trading Friday, broadly on the defensive, while silver fell slightly as global markets waited to see the outcome of the U.S. election, with Georgia in particular a close race.
With results still in limbo on the second day of the US election, Democrat Joe Biden has 264 electoral votes, putting him ahead of incumbent President Donald Trump by 214.
Biden is just six votes short of the 270 electoral votes he needs to win the presidency, and the two are now tied in Georgia, which has 16 electoral votes.
Mr Trump’s dwindling lead in Georgia has seen the two men tie, but he still has a 1,900-vote lead. But Clayton County, a Democratic stronghold in downtown Atlanta, still has more than 5,700 votes to count, CNN reported.
Officials expect the results to be announced at midnight local time, meaning the state’s results could be counted at noon Hong Kong time. Mr Biden would be the 46th President if he wins the state, but Mr Trump is likely to demand a recount.
Under Georgia law, candidates can request a recount within two business days of certifying a result if the margin of victory is 0.5 percentage points or less.
It comes after a judge in the US state of Michigan rejected an application by President Trump’s campaign to suspend the counting of votes in the state. The Judge in Georgia rejected the Trump campaign’s request to separate votes that had arrived late at a counting station.
“It’s becoming increasingly clear that we’re going to have a Democratic President next year,” said Michael Matousek, chief trader at U.S.Investors in New York, adding that would guarantee a bigger stimulus package and hurt the dollar.
“The broader macro environment remains supportive after the US election as we expect further dollar weakness, real interest rates to remain negative and further stimulus measures to come,” said Suki Cooper, an analyst at Standard Chartered.
On daily charts, the dollar index fell nearly 100 points yesterday and is now hovering around 92.60. The daily chart MACD green momentum column gradually expanded, and the KDJ random index fell below the 50 level, indicating that the short-term bearish momentum strengthened and there was room for further downside.
In the 4-hour chart, the DOLLAR index.DXY plunged sharply after hitting a high of 94.30, hitting a low of 92.47 at one point to see if the latter could be held. The MACD green momentum column began to weaken slightly, with the KDJ random index hitting oversold levels below, indicating dollar bearish momentum is weakening, short term or stabilizing.
On daily charts, gold surged nearly $50 yesterday to break through the 1950 barrier and is now consolidating around 1940 highs. Daily chart MACD red kinetic energy column slightly expanded, KDJ random indicator above the 50 level, indicating the strengthening of bullish momentum for gold, or further higher.
On the 4-hour chart, gold has retreated from its peak of $1,952 and is still trading above its major averages. The MACD red momentum column weakened slightly, with the KDJ random index trading near overbought levels, indicating short term gold or further volatility.
On daily charts, silver was above $25 after surging nearly 6 per cent yesterday and the focus is now on finding a foothold there. A small expansion in the red momentum column on the daily MACD chart, with the KDJ stochastic approaching an overbought level, suggests bullish momentum for silver has emerged and there is still room for upside.
On the 4-hour chart, silver retreated slightly after hitting a high of $25.46 and is now focused on support at the $25 mark. The MACD red momentum column has narrowed slightly and the KDJ stochastic has hit overbought levels, indicating a slowdown in silver bullish momentum, short term or volatility.
Fundamentals positive factors:
- The Federal Reserve maintains its loose monetary policy and reaffirms its commitment to do all in its power to sustain an economy that has been devastated by the novel Coronavirus pandemic. — Loose monetary policy is good for gold.
- Democratic presidential candidate Joe Biden is looking increasingly likely to win the hotly contested us election despite the results yet to be released, boosting hopes for a bigger stimulus package. — Bigger stimulus packages are good for gold.
- At least 102,591 new cases of COVID-19 were confirmed in the United States on Wednesday, the highest number in a single day, according to Reuters. With 30,550 new cases of COVID-19 confirmed in Italy, Prime Minister Conte has announced a partial lockdown of Lombardy, the richest region north of Milan’s financial centre. — Risk aversion triggered by the worsening epidemic is good for gold.
- In the US presidential election, there was a dramatic shift in the final count in the key swing states of Wisconsin and Michigan, with The Democratic presidential candidate Joe Biden defying his front-runner for re-election against President Donald Trump. — Risk aversion triggered by election uncertainty is positive for gold.
Fundamentals negative factors:
- U.S. Stocks jumped Thursday. The Dow Jones Industrial Average rose 542.52 points, or 1.95 percent, to 28,390.18. The S&P 500 rose 67.01 points, or 1.95 percent, to 3,510.45. The Nasdaq rose 300.15 points, or 2.59%, to 11,890.93. A rising stock market reduces safe-haven flows into gold.
- The Dow Jones Industrial Average rose 367.63 points, or 1.34%, to 27,847.66 on Wednesday. The S&P 500 rose 74.28 points, or 2.20%, to 3,443.44. The Nasdaq rose 430.21 points, or 3.85%, to 11,590.78. A rising stock market reduces safe-haven flows into gold.
- 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.