By Barani Krishnan
Investing.com - Gold prices had one of the biggest post-summer breakouts on Thursday, rallying 3%, as the dollar tumbled on expectations that the U.S. presidential election might soon deliver a winner who will work on issuing an economic stimulus for Covid-19 relief.
New York-traded gold for December delivery was up $51.45, or 2.7%, at $1,947.65 per ounce, after hitting a six-week high of 1,954.30.
Spot gold, which reflects real-time trades in bullion, rose $41.27, or 2.2%, to $1,944.50 by 11:33 AM ET (15:33 GMT).
Tuesday’s U.S. election has yet to decide if President Donald Trump will stay in office for another four years or if his Democrat challenger Joe Biden will wrest the White House from him.
Stocks on Wall Street, nevertheless, rallied, with the Dow surging 2%, in anticipation of a break soon in the gridlock of some intensely-fought races in the election. The Dollar Index, which pits the greenback against six major currencies, was down 0.8% at 92.695. Gold is a hedge against the dollar and any weakening in the currency usually sends the yellow metal higher.
Gold was also up in anticipation that the incoming U.S. administration, regardless who is in charge, will have to issue a stimulus relief as soon for an economy ailing from the coronavirus — although a split Congress/Senate could complicate those efforts. Fiscal expansions typically boost gold prices.
Democrats, who control the House, reached agreement in March with the Trump administration and Senate Republicans to pass the Coronavirus Aid, Relief and Economic Security (CARES) stimulus. That package dispensed roughly $3 trillion as paycheck protection for workers, loans and grants for businesses and other personal aid for qualifying citizens and residents.
Since then, the two sides have been locked in a stalemate on a successive relief plan to CARES. The dispute has basically been over the size of the next stimulus as thousands of Americans, particularly those in the airlines sector, risked losing their jobs without further aid.