Jakarta, CNBC Indonesia – The price of gold shot above US $ 1,900 / troy ounce again yesterday. However this morning Wednesday (4/11/2020), the price of the yellow metal was corrected but still above the psychological level it had just broken.
The US $ 1,900 level has become a strong resistance level for gold recently. Price bullion still difficult to move up freely. At the close of trading yesterday, the price of gold in the spot market was priced at US $ 1,908.4 / troy ounce.
Today, at 09.10 WIB, the price of gold was cut by 0.36% to US $ 1,901.95 / troy ounce. The trigger for the ups and downs of gold prices is the movement of the US dollar, which is reflected in the dollar index.
When gold prices shot up, the dollar index experienced a weakening. The US dollar and gold have a strong negative correlation, meaning that the direction of movement of the two is opposite each other.
The US general election is already underway. However, the results will not be known in the near future. The counting of votes will take days or even weeks.
This is a risk of uncertainty that must be faced by market players and investors. The largest political contest in the US this time presents two fighters, namely Donald Trump from the Republican Party as the incumbent and his challenger from the Democratic Party, Joe Biden.
In various national polls, Joe Biden, who was once the former vice president of the Barack Obama era, is far more favored. But over time the competition got fiercer.
Trump began to be seeded in several states that were once dominated by Biden. At the same time in several Republican-controlled states, Democrats have managed to narrow their voting margins.
Currently market players are still keeping a close watch on the states that fall into the category swing state to see the chances of each candidate from the two parties winning.
So what will be the impact on gold if Biden wins? So what if it is Trump who returns to office for the next four years?
The answer lies in stimulus. If Trump wins again, he will still have homework to pass the stimulus, which so far negotiations have been stuck due to differences in proposals between the government and the DPR.
There is still a difference of about US $ 400 billion between Trump’s proposal (US $ 1.8 trillion) and the DPR’s proposal controlled by the Blue Party (US $ 2.2 trillion). However, if Biden wins the Democrats will tend to boost government spending more aggressively.
Basically, the future price of gold will depend on the size of the stimulus. If the second stimulus disbursed is classified as large, there will be an increase in high inflation expectations in the future. The budget deficit is getting swollen and this benefits gold.
However, if the opposite happens, the gold price will be depressed. It’s just that for the time being, the price of gold is still potentially depressed by the unclear outcome of the presidential election in Uncle Sam’s country.
CNBC INDONESIA RESEARCH TEAM
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