By Barani Krishnan
Investing.com - Gold prices rose Friday, appearing poised to return to the key $1,900 level, as the safe haven crowd leveraged on uncertainty over next week’s U.S. election and that the winner will attempt to undertake a new major Covid-19 stimulus for the economy.
New York-traded gold for December delivery settled at $1,879.90, up $11.90, or 0.6% on the day. For the month, however, the benchmark U.S. gold contract was down 1.3%, accounting for losses occurring mostly in mid-October as a surge in risk appetite then had weighed on safe-havens.
Spot gold, which reflects real-time trades in bullion, was up $10.26, or 0.6%, at $1,878.12 by 4:00 PM ET (20:00 GMT).
“Haven buying is expected to increase in the coming days,” Jeffrey Halley, analyst for OANDA in New York, said, adding that gold could attempt to try and get over $1,900. “It should be enough to at least, temporarily, stop the rot until the U.S. election passes.”
Democrat Joe Biden is attempting to wrest the U.S. presidency from Republican Donald Trump in the Nov. 3 election, with polls showing the challenger in the lead. Both Biden and Trump have promised to issue an economic stimulus as quickly as possible after the election to help the country deal with the threat of Covid-19.
Gold is a hedge against fiscal expansion and political uncertainty and typically rises in such circumstances.
Democrats, who control Congress, reached agreement with the Trump administration in March to pass the Coronavirus Aid, Relief and Economic Security (CARES) stimulus, dispensing roughly $3 trillion as paycheck protection for workers, loans and grants for businesses and other personal aid for qualifying citizens and residents.
Since then, the two sides have been locked in a stalemate on a successive relief plan to CARES. The dispute has basically been over the size of the next stimulus as thousands of Americans, particularly those in the airlines sector, risked losing their jobs without further aid.