Standard Chartered: Biden's victory will be a huge driving force for gold

SMM News: the US election has become the focus of the market today. Standard Chartered Bank (Standard Chartered) said that if Biden, the candidate of the Democratic Party of the United States, is elected, it will be a huge driving force for gold to rise.

"this will be the biggest boost to the upward trend in gold prices for the rest of the year, and with Biden ahead in the polls, these factors have not yet been fully factored into the gold price."

Suki Cooper, a precious metals analyst at the bank, said that despite Biden's lead in the polls, the gold market and its positions did not show a market reaction.

If Biden wins and Congress is controlled by the Democratic Party, it will be the biggest driving force for the rise in gold prices. And after the US election, the macro background is still good for gold. "

Cooper expects gold prices to return to the $2000 / oz mark in the fourth quarter of this year and rise further to $2100 / oz in the first quarter of next year.

The correlation between gold and the dollar is quite high this year, and this trend is likely to continue, which is why a Biden victory is very good for gold.

"the dollar is still the biggest driver for gold at the moment, and in the past six elections, there has been a strong negative correlation between the price of gold and the dollar before the election, and this correlation has lasted until the general election, and often strengthened."

Cooper pointed out that with a Biden victory and a Democratic majority in Congress, the dollar would be the weakest because of lower interest rates and more fiscal stimulus and tax increases, which would push gold higher.

In addition, it can also be seen from the historical data that the gold will fall under pressure after the election of the Republican Party in the United States.

"in the past six elections, the gold market has been mixed before the election, but the price of gold tends to fall after the Republican election."

In addition, if there is a controversial result in this election and the loser refuses to accept the result and asks for a recount, the uncertainty in the gold market will increase significantly.

In the case of the 2000 US election, gold prices were first in the shock zone and then began to rise at the end of November as the uncertainty continued. However, the price of gold was very low in 1999, and there was nothing good about gold in the whole fundamentals at that time. "

Gold recently rebounded above $1910 an ounce, but fell below 1890 as US President Donald Trump called off a new round of stimulus negotiations.

Short-term positions in the gold market are not ready for the US election, but negative interest rates, unprecedented stimulus packages and a weak dollar will continue to dominate and push gold prices higher in the long run, Cooper said.

Overall, the continued weakness of the dollar will be the long-term driving force for gold.