Gold, Silver prices and the fate of Donald Trump and Joe in US elections I All you need to know of this critical week journey

Ajit Mishra, VP - Research, Religare Broking highlighted that last week Gold had its best week in more than three months as the U.S. dollar slid. Prices also got support on bets for continued pandemic led stimulus and an accommodative monetary policy. Last week, international gold was up by 3.85% and MCX gold was up by 2.90%.

U.S. president elect Joe Biden crossed the threshold of the 270 Electoral College votes required for victory on Saturday by winning the battleground state of Pennsylvania and thereby sealing the fate of Donald Trump, even though he has not admitted defeat yet. Republicans appear to have retained control of the Senate, though the final makeup may not be clear until runoff votes in Georgia in January. 

A Democratic president and House, and a Republican Senate is ideal for the gold market. Since neither party controls the Congress, both issues (trade wars and higher taxes) are largely off the table.
U.S. Fed held interest rates near zero, saying the economy is still well below pre-pandemic levels and indicated to keep its monetary policy loose to sustain economic recovery. In October, U.S. Nonfarm payrolls increased by 638,000 jobs last month after rising by 672,000 in the month of September. That was the smallest gain since the jobs recovery started in May. The unemployment rate fell to 6.9% from 7.9% in September.

In the week ahead, traders will watch where U.S. fiscal policy would be heading and how smooth the transition between an incoming Democratic administration and Republican administration will be. On the economic data front, CPI, PPI and consumer sentiments will be in focus.

Silver is set to post its best week since August, as the dollar weakened and Joe Biden’s victory in the U.S. presidential election boosted hopes for a larger coronavirus relief bill. Last week, spot Silver prices settled up by 8.29% and at MCX it was up by 7.34%.

The dollar sank to its lowest level in over two months against a basket of peer currencies, as vote counting for the contentious U.S. election dragged on and investors predicted more losses for the currency. Investors are betting that Democrat Joe Biden will become the next president but Republicans will retain control of the Senate, which will make it difficult for the Democrats to pass the larger fiscal spending package they have been pushing.

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Federal Reserve officials kept monetary policy in a holding pattern, leaving interest rates near zero and making no change to asset purchases. The Fed kept the federal funds target rate in a range of zero to 0.25%, where it’s been since March. The Bank of England (BoE) has voted unanimously to increase its purchase of UK government bonds by £150bn and to maintain rates at 0.1%, shunning rumours of a move towards negative interest rates.

It’s a relatively quiet week ahead on the economic data front. The focus will then shift to October inflation and weekly jobless claims figures due out on Thursday. Away from the economic calendar, Covid-19 and U.S politics will remain the key driver.