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What was the actual reason that gold tanked this week and what are the assumptions come political election day Tuesday?
This week, gold went down well below its vital $1,900 an ounce level after being stuck there for weeks.
Experts pointed to higher U.S. buck, reduced equities and alternatives expiration as the major factors for the decline. Yet behind all of that noise were political election anxieties and more coronavirus worries as some European nations re-introduced lockdown actions.
One significant variable to bear in mind is that trading quantities stay extremely low as most investors are remaining on the sidelines until the UNITED STATE election plays itself out. What this means for gold is that low volume blended in with aggressive circulations bring about extreme volatility.
With the U.S. election just days away, below is the break down of the best-case/ worst-case situations for the precious metal, according to experts.
A blue wave throughout the board is likely to trigger the biggest gold rally on hopes of a substantial brand-new stimulation that the Democrats have actually been encouraging.
The worst-case circumstance is appearing like a disputed political election, with outcomes unknown for weeks, and feasible civil discontent. This might cause a short-term selloff as financiers rush to cash. Yet in the long-run, this will benefit gold similar to it did back in March.
The most uneventful circumstance for gold will be a split Congress, which would result in a slow work greater in costs.
As soon as we get past all this election noise, the outlook for gold stays extremely positive for 2021, with the rare-earth element projected to be among the biggest property winners. Some forecasts differ from $2,100 to $2,500 by early 2021.
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The election is just days away, is gold the biggest winner?
What was the real reason why gold tanked this week and what are the expectations come election day Tuesday?
This week, gold dropped well below its key $1,900 an ounce level after being stuck there for weeks.
Analysts pointed to higher U.S. dollar, lower equities and options expiration as the main reasons for the drop. But behind all of that noise were election jitters and more coronavirus fears as some European countries re-introduced lockdown measures.
One major factor to keep in mind is that trading volumes remain very low as most investors are staying on the sidelines until the U.S. election plays itself out. What this means for gold is that low volume mixed in with aggressive flows lead to extreme volatility.
With the U.S. election just days away, here is the breakdown of the the best-case / worst-case scenarios for the precious metal, according to analysts.
A blue wave across the board is likely to trigger the biggest gold rally on hopes of a massive new stimulus that the Democrats have been promising.
The worst-case scenario is looking like a contested election, with results unknown for weeks, and possible civil unrest. This could trigger a short-term selloff as investors rush to cash. But in the long-run, this will benefit gold just like it did back in March.
The most uneventful scenario for gold will be a split Congress, which would lead to a slow grind higher in prices.
Once we get past all this election noise, the outlook for gold remains very positive for 2021, with the precious metal projected to be one of the biggest asset winners. Some forecasts vary from $2,100 to $2,500 by early 2021.
__________________________________________________________________
Kitco News is the world’s #1 source of metals market information. Our videos feature interviews with prominent industry figures to bring you market-affecting insights, with the goal of helping people make informed investment decisions.
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