Gold managed to maintain critical support above $ 1,900 an ounce nearly a week after Democratic candidate Joe Biden and Republican candidate President Donald Trump clashed in a chaotic debate. Analysts at German firm Heraeus Precious Metals said pre-election uncertainty will continue to support gold prices in the near term.
« There is already great political and economic uncertainty in gold, but it could intensify as Election Day approaches, increasing gold’s appeal as a safe haven, ”analysts said. in a report released on Monday.
Citing The Economist’s electoral models, analysts said there is an 88% chance that Biden will win the election; however, because of the Electoral College, they added that Trump could still score a victory.
« In 2016, polls underestimated the level of support for Trump and showed Hillary Clinton a large lead until election night, ”analysts said.
However, whoever wins, the German firm said gold will continue to benefit. They noted that a Biden victory could move assets away from volatile stock markets towards more safe-haven assets like gold.
At the same time, Biden is also proposing a spending plan for an additional $ 7.3 trillion over the next decade.
« US government debt is already higher than US GDP and that will add to the growing pile. This could see an additional advantage for gold if it leads to a weaker US dollar, ”analysts said.
Meanwhile, if Trump is re-elected, the Republican president will still face an economy bordering on precariousness.
« Whatever the outcome in November, a weak macroeconomic environment in the United States will prevail in the near term, which supports gold, ”analysts said.
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