Gold price up 2% is getting comfortable with a Biden presidency and more stimulus money - Dragonfly Capital
(Kitco News) - Although votes are still being counted in several states, it appears at the gold market is getting comfortable with the idea of President Joe Biden as he leads in Electoral College Votes.
In a telephone interview with Kitco News, Greg Harmon, founder of Dragonfly Capital, said that the election results are helping the gold market shake off some of its initial inertia. His comments come as gold prices trade at their highest level in roughly two weeks. December gold futures last traded at $1,946.80, up more than 2% on the day.
While Democratic nominee Biden has become the odds on favorite to be the 46th president of the U.S., it is becoming more likely that he oversees a split Congress as Republican’s look to hold the Senate.
However, Harmon noted that the gold market could be betting that more stimulus comes under Biden than it would under Republican nominee Donald Trump.
“Even if you have a split Congress, with Biden as president, you have nudged the stimulus needle a little bit more,” he said. “A Biden victory should be negative for the dollar, and that should be positive for gold.”
Harmon noted that with so much liquidity already sloshing around financial markets, it would not take much more stimulus to drive inflation expectations higher.
“With the election almost over, the potential for more inflation is a lot higher,” he said.
Looking ahead, Harmon said that he sees strong potential for further gold prices, especially as the market has held critical support for nearly two months.
“Gold has just been testing the 2011 2012 highs waiting for more information,” he said. “Long-term gold is in a solid uptrend and I think it has the potential to rise a lot more.”
Harmon said that if gold prices can see a confirmed break above $1,925, then he sees the potential for the market to rally to $2,900. He added that the market is just waiting for a catalyst, which could be a weaker U.S. dollar on a confirmed stimulus package.
“Because gold has been flat, you want to buy when there is confirmation that the weakness is gone,” he said.