Gold prices pull back but bulls hope for future gains


Gold futures headed modestly lower early, with bullion finding few reasons to add to its gains.

However, a number of investors remain bullish on the prospects for the metal in the longer term, amid lingering uncertainties around politics and the expectations that greater government budget deficits will support higher prices for gold and other precious commodities.

“Gold should continue to rise as the stimulus stalemate might only last a little while beyond the election,” wrote Edward Moya, senior market analyst at Oanda, in a Tuesday research note.

Markets are closely watching the 2020 presidential election race between Democratic challenger and former Vice President Joe Biden and incumbent Donald Trump, with the latter trailing significantly in recent national polls with about three weeks headed into the vote. Investors anticipate that a fiscal stimulus package to help relieve the economic pressure from the viral outbreak will likely come regardless of the person who sits in the Oval Office but may be more significant if Biden’s win comes along with broader win for Democrats—a potential boon for gold.

Experts say that signs of rising cases of COVID-19 in many parts of the world and the reinstitution of some social-distancing measures to limit the spread of the deadly infectious disease could buttress bullion values.

“The Northern Hemisphere is struggling with the fight against COVID and that just means fiscal support is coming,” Moya note.

A pause in a vaccine trial by Johnson & Johnson
JNJ,
+0.57%
also was a focus for investors, highlighting the challenges with bringing to market an effective remedy against the disease.

“Many major industrialized countries, including the U.S., just can’t tamp down the Covid-19 infection spread,” wrote Jim Wyckoff, senior analyst at Kitco.com.

Experts say that a U.S. dollar that has been strengthening recently and U.S. equity markets that remain a few percentage points from all-time highs, has been serving as a drag on gold’s gains.

“Gold and silver futures prices are modestly down in early U.S. trading Tuesday, and seeing some pressure in part on a firmer U.S. dollar index on this day,” Wyckoff said.

The ICE U.S. Dollar Index
DXY,
+0.08%
was up 0.2% on Tuesday and has gained about that much so far this week. A stronger dollar can make dollar-priced gold more expensive to those purchasing the commodity using other monetary units.

December gold
GCZ20,
-0.01%

GOLD,
-0.03%
 retreated $2.80, or 0.2%, at $1,926.10 an ounce, after rising 0.1% on Monday.

Silver for December delivery
SIZ20,
-0.55%

SI00,
-0.55%,
 meanwhile, retreated 18 cents, or 0.7%, at $25.09 an ounce, following a nearly 0.7% gain in the previous section.



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