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  • Gold prices are stubbornly bid within a bearish environment.
  • Uncertainty and volatility keeping the yellow metal coiled in a familiar range.

The price of the yellow metal has so far been held up sideways in a $1,897.91-$1,911.35 range on Tuesday, currently bid up some 0.32%.

The price had been slowly chipping away to the downside below resistance and within a bearish environment on the weekly chart.

However, the price is caught up in fundamentals which are making for s gruelling swing trade for the bears, positioned for a downside continuation. 

Gold could be in what is now a wait-and-see mode ahead of US elections on the 3rd of November.

Markets are evaluating the potential for a fiscal stimulus deal to be struck in the lame-duck session which hinges on the election results. 

A Biden victory ( Blue wave) could keep gold bid

”Certainly, a Blue Wave has driven expectations of a lower dollar, as more stimulus fuels a global reflationary wave, but it has also fueled the bear steepening in the Treasury curve,” analysts at TD Securities argued.

”While we think the Fed will mitigate these risks shortly after the election by extending the duration of QE, the Fed is taking a reactive approach — which suggests that rates may need to rise to prompt them to act.”

Overall, a Biden landslide is expected to weigh on the greenback that has so far enjoyed bouts of demand on risk-off flows. A weaker dollar should amount to higher gold prices.

However, under a split government scenario, achieving consensus on a large package and details regarding state aid could be tough. 

This should bull flatten the yield curve, providing another risk mitigant in this scenario, the analysts at TD Securities have argued, adding:

”In the medium-term, the balance of risks remain firmly tiled to the upside for gold bugs, as traders may not need to look too far in order to discount these risk mitigants. For the moment, the waning upside momentum has raised the bar for CTAs to add to their longs in the yellow metal.”

Gold technical analysis

  • Gold Price Analysis: Remains below key counter-trendline resistance