Gold price gains as dollar struggles on a likely Biden win

Gold prices soared nearly 1% on Thursday after the U.S. dollar fell on new updates from the U.S. elections race that signal the Democratic candidate Joe Biden is on the brink of White House. 

Fundamental analysis: Dollar slips as Biden makes a big step towards presidency

Spot gold prices yesterday dropped on the uncertainty related to U.S. presidential elections. The dollar headed in the opposite direction. 

President Trump triumphed in the swing states of Florida, Ohio and Texas, while AP and NBC News now call Michigan and Wisconsin in Biden’s favour. In this case, Biden needs to maintain his advantage in Arizona and Nevada to be elected as the new President. 

Due to the decades-long inverse correlation between gold prices and the dollar, the former is likely to keep advancing if the greenback heads lower as predicted by market analysts.

Technical analysis: Descending wedge broken

Gold spot prices currently trade 0.78% up on the day at $1918 per ounce. As in the chart below, the price action broke above the important short-term resistance - consisting of the 200-DMA and wedge’s resistance - at $1895.

This break facilitated an open path towards the next resistance line (the red line) at $1,920 for gold traders. A break above $1,930 will pave the way for a test of $1,975, especially if dollar weakness persists.

Summary

Gold prices gained nearly 1% today as investors increase their bets on the higher likelihood of Joe Biden becoming the next President of the United States.