Gold to Enter Consolidation Following Unexpected Poll Developments

Gold (XAU/USD) traded on a negative bias in the early European trading session on Wednesday, as the price barrels towards $1876 once again.

A goodish bounce in the US dollar (DXY) was regarded as the major factor exerting pressure on the dollar-denominated commodity. Early election results from the US indicated that the race for the White House is far tighter than largely expected.

Many traders expected a clear-cut victory for Democratic candidate Joe Biden, however, recent developments have forced investors to hedge their bets, which has driven some aggressive demand for the greenback. Furthermore, reports indicate that results from key swing states like Wisconsin, Michigan, and Pennsylvania will be delayed due to the late counting of mail-in ballots.

Meanwhile, the latest comments from the incumbent, President Donald Trump, that the final election results could be contested in court has ignited a fresh wave of global risk aversion. This was obvious in the sharp decline in the US equity markets and a slump in the Treasury bond yields, which has extended some support to the non-yielding commodity.

That said, the commodity is likely going to get thrown into a consolidation range given the renewed uncertainty. This means that we could see the $1876 level soon.

Gold (XAU) Value Forecast — November 4

XAU/USD Major Bias: Sideways

Supply Levels: $1900, $1912 and $1923

Demand Levels: $1883, $1876, and $1860

Given the current state of things, the XAU/USD is likely to enter a consolidation range between $1900 and $1876 in the coming hours. Although a descent below $1876 seems improbable at the time, new developments from the polls could bolster the greenback further, which would undoubtedly have grave consequences on gold.

That said, it is advisable to remain on the sidelines in the meantime.

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