Gold prices reversed to the downside overnight as headlines giving Trump a chance to win the election starting to pop up all over the internet.
Gold futures are trading lower on Wednesday as an upward shift by the U.S. Dollar during the U.S. presidential election tally drove down demand for the dollar-denominated asset.
Despite the current weakness and two-sided trade, the election is too tight to call so let’s just say the market will be vulnerable to violent direction shifts throughout the session since it may take as much as a week to declare the winner if either candidate doesn’t send it to the Supreme Court.
At 11:31 GMT, December Comex gold futures are trading $1892.20, down $18.20 or -0.95%. This is down from an earlier high of $1917.90.
Besides the presidential election, traders are also expressing concerns about the U.S. House and Senate voting outcomes and their potential effect on further stimulus measures. The Democrats appear to have held onto control of the House, while Republicans appear to be in a position to continue to control the Senate.
Election Betting Odds Have Flipped to Favor Trump, Expert Says
Gold prices reversed to the downside overnight as headlines giving Trump a chance to win the election starting to pop up all over the internet. Of course, since the polls were closed, they couldn’t influence voters, but they could influence traders. With the markets pointing toward a clean Joe Biden victory since early Sunday, gold buyers were caught off-guard when reports showed the President still had a chance at winning a second term.
President Donald Trump is now favored to win the election based on an average of betting websites, an expert told Fox News Tuesday. Overnight, electionbettingodds.com, created by Maxim Lott and John Stossel, flipped its averaged betting odds in favor of Trump.
“He hasn’t won yet, but it’s looking like he might,” Lott told Fox News Tuesday night.
Let’s start out by saying that nobody is any smarter about the outcome of the election than they were four hours ago, which could mean gold trading will be stalled throughout the session until something meaningful is produced by the states that have yet to report their results.
At this time, the popular vote favors Biden over Trump, but the electoral vote, the one that really matters is still too close to call. Investors are currently looking to see whether Trump can retain the so-called Rust Belt states – Michigan, Wisconsin and Pennsylvania – that sent him to the White House in 2016.
The early price action indicates that a Trump win will be good for the U.S. Dollar, which will keep the pressure on gold prices. Meanwhile, a Biden victory will be bullish for gold because his administration is expected to implement mountains of stimulus.