Gold Awaiting Catalysts in the form of Central Banks
Gold was trading slightly higher on Tuesday after it posted an uncertainty in the session on Monday. However, the range in which the XAU/USD moves is still minimal and shows that the market is doubtful.
While the growth of daily COVID-19 cases around the world hurts market sentiment, the US presidential election is keeping investors on the sidelines and is waiting for developments.
Besides, central banks with those of Canada, Japan, and the eurozone are going to decide the monetary policy in the coming days.
Gold below the 50-day moving average
Gold is posting a 0.35% gain on the day trading at 1,908. However, that doesn’t mean a break out of the 1,890-1910 range that gold is moving in, it’s far from it. The 50-day moving average line for XAU/USD is at 1,919 right now.
Meanwhile, the dollar index is trading lower on Tuesday after gains made in yesterday’s session. The dollar hit the 93.00 level again and today fell to 92.80.
Right now, the DXY is being priced at 92.88, which is down 0.20% on the day. The index experienced a short-term rebound from the low of 92.50 traded on October 21.
While the market is focused on the US presidential elections, analysts believe that the dollar forecast will be the same regardless of who wins the US elections.
President Trump has probably reduced the odds that the tax aid package will arrive before November 3 to zero. He has said it would likely arrive after that date, despite the increase in infections.
The most important issue right now is elections and all the volatility associated with this issue. Despite polls indicating that Democratic candidate Joe Biden is the front-runner, those numbers are beginning to show more equality between the two candidates. This is creating uncertainty that increases the demand for the US dollar. When the dollar rises, foreign demand for dollar-denominated gold falls.
Some analysts state that time is running out for Trump with no evidence of a final spike in polls like the one that took place in 2016. The Trump spike had started four years ago, as is evident from the comparison between Trump and Clinton four years ago to this day, versus Trump and Biden now. Biden is 4.1 points ahead in six key states, while Clinton was just 2.8 points ahead exactly four years ago. We see a weaker USD in 2021 no matter who wins. But we are more confident that it will be under Biden’s presidency.
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