CHICAGO, KOMPAS.com – Price gold futures rose sharply at the end of trading Friday (9/10/2020) local time (Saturday morning WIB).
The increase in the price of this precious metal is in line with the fall dollar AS to an almost three-week low and increasing speculation for stimulus new AS encouraging investors to turn to gold as a hedge against possible inflation.
The most active gold contract for December delivery on the COMEX division of the New York Mercantile Exchange, surged $ 31.1, or 1.64 percent, to close at $ 1,926.2 an ounce.
“It looks like a lot of optimism is being built around US stimulus and it’s really at the forefront of gold’s move,” said Eli Tesfaye, senior market strategist at RJO Futures.
According to him, further declines in the US dollar could add to the upside driving force and given the strong technical momentum, gold could soon hit the highs seen in August.
After postponing talks with Democrats about a comprehensive aid package earlier this week, US President Donald Trump called for a “lean” aid bill that would include a bailout for the struggling airline sector.
Additionally, Democratic presidential candidate Joe Biden’s lead has raised the prospect of further stimulus, adding to the allure of gold.
Meanwhile the US dollar has fallen in line with rising expectations of a Biden victory, making gold cheaper for those holding other currencies.
“In fact, long-term gold trading is likely to be agnostic to the election outcome,” TD Securities analysts said in a note.
“Unless the government results are divided, the two governments will likely push for a large-scale fiscal deal in the short term that will help ease the jamming real interest rate pressures, lifting the precious metal in the process,” he added.
Interest rates are near zero and the central bank’s unprecedented printing of cash to defuse the economic hit from the coronavirus pandemic has driven a 26 percent rally for gold this year.