XAU/USD is eyeing $1 850. Will it be able to reach it?
Election may push gold up
2020-10-29 • Updated
Gold is trading sideways around the $1 900 level, but Biden’s victory will drive it upwards. Analysts from JPMorgan expect the yellow metal to make a 5% spike on a “blue wave”. This term refers to the United States Democratic party's success. Actually, national polls showed that Joe Biden leads the election race. However, the last word is for the Electoral College and it may be different from what the majority of Americans think. If he really wins, it may hit markets, - JPMorgan claimed. He is planning to impose higher taxes, which will lead to negative investors’ reactions. And, that situation should increase the demand for gold!
At the same time, this jump in gold prices will be short as Democrats also pledged to impose the larger fiscal stimulus, which will boost economic growth and as a result will improve the sentiment and underpin riskier assets. Besides, if Trump wins, the USD will surge and gold will drop. So, in any case, the long term is bearish for gold, according to JPMorgan.
JPMorgan’s forecast shortly
To sum up, if Biden wins – gold will rise in the short term, but then fall in the long term. Otherwise, if Trump wins – gold will fall.
XAU/USD bounced off the key resistance of $1 912 and broke through the support of $1 900 at the 23.6% Fibonacci retracement level. Now it may drop to the low of October 13 at $1 890 and then to the next support of $1 875. Otherwise, the move above $1 912 will drive the yellow metal to the high of October 21 at $1 925, but be cautious as there are upper trendline and the 50-day moving average that constrain gold’s rally up.
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