SMM: November 3, international gold prices are expected to close higher for the third day in a row, as the dollar index pulls back sharply, far away from the previous day's high of more than a month. The market is filled with caution as voting in the US general election has begun. Many traders are not betting that the election will lead to a specific result, and they are preparing for a post-election controversy. If this happens, it could trigger a sharp rise in dollar volatility. The dollar's range narrowed in October as investors went to court worried about the disputed election results and a new wave of blockades in the US and Europe would hurt the economy.
Beijing 20 39, spot gold rose 0.29% to $1900.89 / oz, COMEX gold main contract rose 0.47% to $1901.4 / oz, and the dollar index fell 0.48% to 93.620.
Gold hit a four-day high of $1902.10 an ounce, while the dollar index moved away from the previous day's high of 94.285 since Sept. 29 and is expected to end a four-day rally.
How to deal with possible disputes?
U.S. president Donald Trump and Democratic candidate Joe Biden gave tit-for-tat speeches in key states on the last day before the election and urged voters who had not yet cast their ballots to cast their ballots. As the two candidates made their final canvassing, their campaign was already paving the way for post-election controversy.
Trump, who lags behind in national polls, continues to make unfounded attacks on mailed ballots, hinting that he will let lawyers intervene if states are still counting votes after election day. His deputy campaign manager, Justin Clark, said his campaign would crack down on any attempt by Democrats to "undermine the deadline for states to receive and count votes."
In response, Biden's campaign manager Jennifer O'Malley Dillon woke up on Monday and said that in past U.S. elections, states usually needed time to count votes after election night. "under no circumstances will Trump be declared the winner on election night."
Trump, 74, is seeking to avoid becoming the first president to fail to win re-election since Republican President George W. Bush in 1992. Although national polls give Biden a wide lead, the two men look neck-and-neck in swing states, and Trump is still likely to get the 270 votes needed to win in the decisive state electoral college vote.
The election could complicate the chaotic campaign as the number of mail ballots reached an all-time high. Investment companies have hired political analysts while struggling to analyze voting data in an attempt to identify key districts and Senate elections, which may tell them where the votes are going.
Market conditions are likely to be volatile as election results are due to be announced during the Asian session on Wednesday. Affected by the epidemic, the surge in the number of mailed ballots may also lead to an extension of the counting process this year. Some states in the United States take several days to count votes.
Antje Praefcke, a strategist at Commerzbank, said in a note to clients: "those who have not yet hedged but will feel pain from sharp fluctuations in the exchange rate should hedge as soon as possible, as the cost of hedging is getting higher and higher." She added that unrest in the United States could not even be ruled out, which could lead to a sell-off of dollars in the market.
Analysts say that if Biden wins, it will weaken the dollar because he plans to launch a massive stimulus package and take a more tolerant approach to trade-thereby hurting the dollar and boosting other currencies. But the battlefield state election situation is stuck, whether Trump wins or does not know whether he wins or loses, he is likely to support the dollar, and the selling pressure is limited.
The epidemic is expected to continue to be good for the short-term trend of the US dollar.
The number of novel coronavirus infections has soared, forcing some countries to impose some national blockades in November. British Prime Minister Johnson has ordered the resumption of a blockade across England from Thursday as a second wave of the epidemic could overwhelm the country's health services. France and Germany also imposed national restrictions earlier last week.
Fauci, a top infectious disease expert in the United States, said that the first batch of effective novel coronavirus vaccine may be provided to some high-risk Americans by the end of December or early January. Trump, who has often publicly disagreed with Fauci, hinted earlier Monday that Fauci might be fired after the election.
The recovery seen at the beginning of the summer has been halted by a surge in new coronavirus cases in Europe and the United States. If the dollar eventually rises as a result of the disputed election results, despite rising risk aversion, this could limit gold's upside.
It is difficult for the dollar to change its long-term weakness
But no matter who wins the US presidential election, the dollar is unlikely to improve in the long run, investors and analysts say. Despite the current surge in novel coronavirus cases and the recent rebound in the dollar index, it is still down about 9 per cent from its March high, and the annual line is likely to close again after two years, as US interest rates are expected to remain near record lows in the coming years.
Steve Englander, global head of foreign exchange research at Standard Chartered's G10, said: "the trend of the dollar obviously depends on the outcome of the election, but what is striking is that. How much more can the dollar seize land, and if any, many investors see this pullback as an opportunity to sell dollars. "
Francesco Pesole, foreign exchange strategist at (ING), the Dutch international group, said: "by historical standards, the dollar position is still clearly skewed towards net short positions, and given the concentration of the risk event of the US election, if the election result is market-friendly, there is certainly more room for growth."
Democratic lawmakers and Republican President Donald Trump have been unable to agree on a new economic stimulus package. The new spending plan may not be agreed on until early 2021, depending on the outcome of this week's presidential election.
Many market participants believe that if Biden, who currently leads the polls, wins, and the Democratic Party wins, it could put further pressure on the dollar and may bring considerable action energy to gold. Biden is expected to adopt policies that investors believe are bad for the dollar, including a strong fiscal stimulus package.
Trade protection is not equal to the negative rate of return in real terms.
Us President Donald Trump's "America first" policy has torched a decades-old global consensus on trade liberalisation as relations between the US and its major trading partners have been damaged to varying degrees because of his tough stance on tariffs.
Mr Trump boasts of his contribution to protecting the interests of American workers, but economic data so far show that the results of the effort have been mixed: some industries have benefited at the expense of others, while the overall trade deficit in US goods and services has barely changed.
Analysts said that if Trump wins re-election, while Trump's continued tough policy on trade issues could enhance the attractiveness of the dollar as a safe haven, the pressure from factors such as continued negative real interest rates in the United States may outweigh the positive impact.
The real, inflation-adjusted yield on 10-year US Treasuries fell below zero during the 2020 epidemic. This weakens the charm of the dollar and drives up assets such as stock markets and gold. Analysts expect yields to rise to 0.93 per cent in 12 months, about half the expected average inflation rate, indicating negative real returns in the coming year.
For years, the United States has higher interest rates than other developed countries, attracting yield-seeking investors, thus supporting the dollar. But the Fed cut interest rates in 2020 in response to the economic impact of the epidemic and vowed to keep interest rates at historically low levels for several years, narrowing the spread advantage.
Kit Juckes, head of foreign exchange strategy at Soci é t é G é n é rale, said: "to some extent, we are back to what I call the basic point that the dollar is too expensive at this level in terms of current world spreads. We will see that the dollar is likely to return to its low during the epidemic after the election. "
Spot gold may have started an upward trend from 1860 US dollars.
Spot gold from 2075 US dollars to start the adjustment of the ((iv)) market shows (w)-(x)-(y)-(w)-(z) five waves shock convergence mode. Gold prices end the downward (z) trend at $1860, and the upside ((v)) trend may be opened in the future. On the daily chart, both the, ((iv)) wave and the ((v)) wave are the sub-waves of the upstream three waves, which started at $1455.
