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U.S. election risk 'under-appreciated', gold price could see new record highs above $2K before year-end, Citi says

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(Kitco News) After dropping to a two-month low this week, gold could climb back above $2,000 an ounce and hit new record highs before the year-end as the U.S. election risk remains underpriced in the precious metals space, according to a report published by Citigroup Inc.

Uncertainty surrounding the November 3rd U.S. election, including potentially contested results, could “be under-appreciated by precious metals markets,” Citi analysts wrote in a quarterly commodities outlook.

This would mean the gold price would have to rise more than $200 from its current levels. At the time of writing, December Comex gold futures were trading at $1,870.00, up 0.51% on the day.

A record high in gold was set back in August when December futures climbed above $2,070 an ounce for the first time.

Fear and uncertainty surrounding the global economy amid the COVID-19 pandemic, including extremely loose monetary policy worldwide, have been driving the gold sector this year. Prices are currently up 17% since the start of the year.

As the U.S. election approaches, the political situation is becoming more heated with the latest round of tensions surrounding the U.S. President Donald Trump’s plan to speed up the replacement of the late Justice Ruth Bader Ginsburg on the U.S. Supreme Court.

“We need nine justices. You need that. With the unsolicited millions of ballots that they’re sending, it’s a scam; it’s a hoax. Everybody knows that. And the Democrats know it better than anybody else. ... So doing it before the election would be a very good thing because you’re going to probably see it,” Trump told reporters on Tuesday.

Considering all the uncertainty around the election, Citi noted it could be “an extraordinary catalyst” for gold during the fourth quarter.

“That is one reason why we expect gold prices to hit fresh records before year-end,” Citi said

Aside from the election turbulence, Citi’s outlook on gold is a positive one, in general, considering the low-interest-rate environment. Citi views gold as being in the middle of its current bull cycle, according to the report.  

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