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Gold Recoils Before Biden’s Expected Senate Control; New Rally Seen

CommoditiesJan 06, 2021 03:02PM ET
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By Barani Krishnan

Investing.com - Gold prices tumbled 2% Wednesday in profit-taking ahead of an anticipated swing in Senate control to President-elect Joe Biden’s Democratic party, that analysts said could result in new stimulus by his administration and new highs for the yellow metal.

Two runoff elections in the state of Georgia showed victory for Democratic candidate Raphael Warnock and a leading vote count for his colleague Jon Ossoff that would put the Democratic Senate representation level with that of the Republicans, allowing Vice-President elect Kamala Harris to break the tie with her vote.

The Democrats already have the House of Representatives, the lower chamber of Congress, in their control. Winning the Senate, the upper chamber, will give them a complete majority in the U.S. legislative assembly and the power to push forward their agenda.

Biden, whose term begins Jan. 20, has hinted that he wants at least two stimulus packages in 2021 to override the economic malaise expected to continue from the coronavirus pandemic. His first order of business might be to push out $2,000 checks to most Americans, a measure stiffly opposed until December by the Republicans.

Analysts have said gold prices, which hit mid-$1,900 levels earlier this week before Wednesday’s profit-taking, was poised for a new run-up that could possibly take the precious metal to $2,000 and beyond as investors buy in as a hedge against Biden’s fiscal measure.

Gold’s slide on Wednesday was also triggered by a surge in bond yields marked by the U.S. 10-Year note, which jumped its most since Dec. 1.

U.S. gold futures for February delivery on Comex settled down $45.80, or 2.3%, to settle at $1,908.60 an ounce.

GOLD RECOVERS AS TRUMP PROTESTORS OVERRUN US CAPITOL

In post-settlement trade, however, February gold recovered almost a third of those losses, trading at $1,920 by 2:45 PM ET (19:45 GMT). Part of the recovery came as supporters of outgoing president Donald Trump, disgruntled since his November election loss to Biden, stormed into the U.S. Capitol. Their action came after a failed last bid by Trump in Congress to stop Biden from taking office in two weeks.

Analysts were confident that gold would return to the near $1,950 levels it hit this week and push toward the record high of almost $2,090 achieve in August.

“With the trend line/100 day Moving Average as support, and the November high as resistance, the price of the precious metal has defined the boundaries traders should now eye,” said Greg Michalowski on the FX Live platform.

Gold Recoils Before Biden’s Expected Senate Control; New Rally Seen
 

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Comments (6)
Irvin Mermelstein
Irvin Mermelstein Jan 06, 2021 7:25PM ET
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These were not "protesters." They were treasonous, violent rioters.
Nikita Savelev
Nikita Savelev Jan 06, 2021 7:25PM ET
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while rioters during last summer were obviously mostly protesters
Barani Krishnan
Barani Krishnan Jan 06, 2021 7:25PM ET
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True, Irvin.
Ali Rate
Ali Rate Jan 06, 2021 7:06PM ET
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god bless you
Ali Rate
Ali Rate Jan 06, 2021 7:03PM ET
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hy Dear How are you very nice brother
Barani Krishnan
Barani Krishnan Jan 06, 2021 7:03PM ET
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Ali Rate, thanks much. All is well here. Bests and a Happy New Year to you.
Ali Rate
Ali Rate Jan 06, 2021 7:01PM ET
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hy dear how you very nice my brother
Mohammad ASAD Ali
Mohammad ASAD Ali Jan 06, 2021 6:18PM ET
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Dear Mr. Barani,How are you? hope everything is fine with you and your family.As usual you made excellent analysis.Be Safe, Take care and have a nice time with your family, friends and loved ones
Gregor Stojanovic
Gregor Stojanovic Jan 06, 2021 3:22PM ET
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Good reading, as always. Gold should reach at least 1970 USD, perhaps even 2000 USD by the end of this month.
Barani Krishnan
Barani Krishnan Jan 06, 2021 3:22PM ET
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It should by all reckoning, Gregor. Thanks for the feedback.
Mohammad ASAD Ali
Mohammad ASAD Ali Jan 06, 2021 3:22PM ET
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Dear Mr. Barani,How are you? hope everything is fine with you and your family.As usual you made excellent analysis.Be Safe, Take care and have a nice time with your family, friends and loved ones
Barani Krishnan
Barani Krishnan Jan 06, 2021 3:22PM ET
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Mohammad ASAD Ali  Thanks much for asking. We are good and well here and wish the same for you. Bests and a Happy New Year.
 
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