- Gold trims weekly losses and returns to $1,885 area.
- The precious metal bounces up amid moderate dollar weakness.
- A clear Biden’s victory might open the doors for gold’s recovery.
Gold futures have bounced up from $1,860 lows, returning to $1,885 area, buoyed by a slightly brighter market mood on Friday which has eased safe-haven demand for the US dollar.
Gold depreciates in a cautious market
The yellow metal, however, remains negative on the week, on track for a 1,1% depreciation. Market concerns about the impact of a second COVID 19 wave and the uncertainty above the US elections have strengthened the US dollar, on the detriment of dollar-denominated commodities, like gold, which dropped to levels right above multi-month lows at $1,850.
A round of short-covering in the last trading day of the month could explain the moderate pullback of the US dollar, which has helped bullion to take some distance from recent lows. Beyond that, the decline on US treasury bond yields has contributed to easing demand on the USD offering further support to gold’s recovery.
A Democrat victory might clear the bullish path for XAU/USD
Next week’s US elections are expected to defining the near-term path for gold futures, says FXStreet’s Analyst Yohay Elam, who sees XAU/USD appreciating in case Biden obtains a clear victory: “Gold heavily depends on the election results – for the White House and very much the Senate. Opinion polls are pointing to a handy victory for Biden over Trump. However, Trump may not necessarily accept the outcome and that could cause chaos that would drag markets down and gold with it. Yet even assuming Biden wins, the path higher for gold would be clearer with a blue wave – flipping the Senate.”
Technical levels to watch
