Head-to-head between Biden and Trump – in the end, the winner may be Gold

November 04, 2020 10:30

Source: Economic Events November 04, 2020 - Admiral Markets' Forex Calendar

One of the most anticipated days of 2020 has finally arrived: the US presidential election. First projections show that the race between Joe Biden and Donald Trump is much closer than initially thought and that a final result may still be hours, maybe even days away.

But, the true winner of this election is a member of neither the democratic nor republican party, but the yellow metal: Gold.

Here are some points to consider:

  • Price action over the last days already points to potential Gold strength, with the precious metal drifting back to its potential inflection point at around 1,900 USD, a level which has already been recaptured in the last hours
  • With last week's US GDP data, it has become clear that the US government, democratic or republican, will have no other choice than to deliver a massive fiscal stimulus package which will be financed with freshly printed US-Dollars
  • While the US economy expanded in Q3/2020 by 33.1% (YoY), its biggest expansion ever, GDP is still 3.5% below its pre-pandemic level and the outlook for Q4 and 2021 remains uncertain as the pandemic is far from under control and a vaccine is not yet ready.

While it certainly remains to be seen whether US president Trump accepts his defeat and how he plans to leave office (e.g. by blocking any attempts for a Corona relief package), not only can these uncertainties potentially drive Gold higher, but the final delivery of a relief package can, as well.

All in all, Gold has found itself in a quite positive position for Long engagements, risk-reward wise, about to enter a historically known seasonal bullish window in December and January, which could drive the price for the yellow metal back above 2,000 USD.

Short-term targets and an important region of resistance can be found around 1,930 and 1,975 USD, while breaking the latter could be the initial bullish catalyst that drives Gold up to its current yearly and All Time highs around 2,075 USD or even higher:

Source: Admiral Markets MT5 with MT5SE Add-on Gold Daily chart (between June 20, 2019, to November 04, 2020). Accessed: November 04, 2020, at 05:30 PM GMT. Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2015, the value of Gold fell by 10.4%, in 2016, it increased by 8.1%, in 2017, it increased by 13.1%, in 2018, it fell by 1.6%, and in 2019, it increased by 18.9%, meaning that in five years, it was up by 28%.

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