- Political uncertainty in the US kept the USD bulls on the defensive and helped gold gain traction.
- The rally lacked a strong follow-on buying and risks fading away fairly quickly.
- Investors are now waiting for the release of the US Q3 GDP report for further momentum.
Gold prices have moved higher during the Asian session on Thursday, reaching an intraday high in the region of $ 1,885. At the time of writing, gold has returned all of its initial gains and remains virtually unchanged on the day in the region of $ 1,877.
The precious metal managed to regain some positive traction on Thursday and has recovered part of the previous day’s sharp drop to month-long lows amid weak demand for the US dollar. Uncertainty about the outcome of the US presidential elections prevented dollar bulls from opening aggressive positions, which in turn has been seen as a key factor in offering some support to dollar-denominated gold.
It is worth reporting that national polls have been indicating that the Democratic candidate Joe Biden has an advantage over current Republican President Donald Trump. Investors, however, remain cautious due to a tight gap in certain key states. Adding to the uncertainty is the possibility that the result will be challenged, further propelling investors toward the yellow safe-haven metal.
Despite the supporting factors, the rally has lacked a strong following amid a strong rally in US equity futures. Further, the previous day’s break below the support of the 100-day SMA for the first time since March warrants some caution for the bulls. Therefore, any subsequent bullish movement could be seen as a selling opportunity and risks disappearing quickly.
That said, investors might still prefer to wait on the sidelines before Thursday’s key release of the US Q3 GDP Advanced Report. The US economy is expected to have grown at an annualized rate of 31% during the July-September quarter. Any significant divergence from expected numbers could instill some volatility in financial markets and help investors seize some significant opportunities.
Credits: Forex Street
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