The effect of the election on the price of gold is a topic of passionate debate. It’s generally understood that the value of the US dollar correlates with the price of gold. A high dollar value means a lower price for gold while a weaker dollar means a higher price for gold.

Over the weekend the S&P 500 index climbed to a three-week high as election results appeared tilt towards Joe Biden, who’s victory pointed to a larger fiscal stimulus package and the potential to reshape US foreign policy. How the government plans to handle an increasingly alarming coronavirus wave will be a post-election focus.

US corporate earnings have fared well, underscoring resilience of the economy after lockdown measures were eased. So far in the earnings season, 84% of S&P 500 index constituents have reported results, among which around 86% have beaten analysts’ earnings per share (EPS) estimates. If 86% is the final percentage, it will mark the highest share of S&P 500 companies reporting a positive EPS surprise since 2008.

With Joe Biden emerging as the new US president the Wall Street will now focus on the $700 billion infrastructure plan, $775 billion child-care plan and $2 trillion climate plan

However, the Dollar was disappointing and the Dollar’s sell-off helped gold settle at $1,950 a troy ounce. The bright metal will probably run alongside hopes for fiscal stimulus. Oil prices, on the other hand, edged lower, with WTI ending the week at $37.40 a barrel.

Gold spiked significantly this week and brushed shoulders with 1,960. The instability witnessed in the stock market saw the precious metal used as a hedging asset. The rally to 1,960 was a continuation of the uptrend started towards the end of October. The days heading to the US election shined a light on the gold, catapulting it to new monthly levels.

Gold closed the week changing hands at 1,952 (Market price on 8th November) after embracing support at 1,950. Gold’s immediate upside is capped by the seller congestion at 1,950. Consequently, the formation of a descending channel adds credulity to the bearish narrative. Therefore, it is likely for the precious metal to crumble in the coming week, especially if the wedge pattern support and the short-term anchor at 1,940 caves in.

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