Why doesn’t gold act like gold? Safe haven after the US elections

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Editor’s Note: In just a few minutes, discover our quick summary of the must-see news and expert opinions that have moved precious metals and financial markets. Register here!(Kitco News) Gold hit its lowest level in a month this week amid electoral uncertainty and renewed coronavirus fears. But the million dollar question is “when will metals start to act like metals,” said Bob Haberkorn, senior commodities broker at RJO Futures.

The precious metal fell to a low of $ 1,859 on Thursday and was unable to recover significantly higher at the time of writing.

“We have the coronavirus rise, stocks are down, the dollar is up. Markets were anticipating a stimulus deal, but there is no stimulus before the election, ”Haberkorn told Kitco News on Wednesday.

If the selling worsens just before the election, gold will test $ 1,850 an ounce first, then $ 1,825, Haberkorn noted.

“We could see $ 1,825. If you get more announcements of closures because of the coronavirus, stocks could be scared even more, which in turn will push gold and silver down ahead of the election, ”he said.

Just two weeks ago, the markets were almost certain of a Democratic sweep at the polls. Now the situation looks more confused.

“If you had asked me two weeks ago who was going to win, I would have told you, Biden. If you asked me today I’m starting to think Trump is going to pull this stuff off based on some of the data You could see a Trump win, which would see a significant rally in stocks that night, then a significant rise gold and silver, as well as stocks, coupled with the hope that a stimulus deal is coming to fruition. Haberkorn noted.

If Biden wins, metals, including gold, will rally even more because his stimulus package will likely be much higher than Trump’s, he added. “Once we get past the election next week, you should see a rally in precious metals as the likelihood of a stimulus deal will be much greater. ”

What investors need next week is for gold to start acting like gold – providing security. Right now, while everything looks risk-free, most safe-haven offerings are directed towards the US dollar, Haberkorn explained.

“Metals have to start acting like metals here. They’re so tied to stocks, and it’s been happening since the coronavirus hit. the hike is the reason stocks rise – government stimulus and money printing, ”he said. “So that’s the million dollar question, when do metals start to act like metals?” ”

The decoupling of gold from equities could come as soon as the markets pass the election, Haberkorn said.

“We will get to the point where the market is just fed up with stimulus and central bank bailouts, metals will have a great year in 2021,” he said. “If Biden wins you’re going to get a sell off of shares, and then you’ll probably see gold and silver, maybe start that disconnect because the anticipation of a much bigger stimulus would be a reason.” for gold and silver to come together. ”

Considering all the macro factors, gold and silver are expected to be higher than current levels, especially given all the money printing and the security appeal of metals, Haberkorn added. “The best thing I’ve heard this whole year is that the Federal Reserve can’t create more gold or silver. But she can create dollars.

Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. This is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.

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