The markets are off to a strong start as the U.S. Presidential election rapidly approaches. It seems as if markets have perhaps already priced in a Democratic victory, and there may not be as much volatility as many had earlier predicted.

A Joe Biden Presidential victory could, however, dictate market action across a variety of asset classes in the months ahead. If Biden were to elect to close the economy, for example, stocks could have a tough road ahead and alternative asset classes such as gold could lead the way higher. The dollar could also possibly take another hit if Biden were to order further large-scale stimulus measures to battle the economic slowdown.

Of course, a Biden victory is nothing more than speculation at this point and Trump is still very much in the race. With some analysts suggesting that Biden is now holding a 10-point lead over Trump the day before the election, the biggest market risk could now lie in the election results and whether they are contested. A disagreement over the results could lead to widespread market volatility and selling. It could take weeks, possibly even months, to sift through a contested result to determine the winner. Recent market action would seem to suggest that markets do not necessarily fear a Democratic victory, but rather are more afraid of unclear election results after the vote.

It seems that Trump and the Republicans have already begun to lay the groundwork for legal action following Tuesday’s vote, and such action could take weeks or longer to be processed. If there is no clear winner within the next few days, investors could become increasingly agitated and could begin to sell out quickly. Although such a scenario could pave the way for higher gold and metals prices, it could also lead to a significant sell-off in the asset class as investors may simply become hungry for cash.

Despite the election and its outcome, the gold market appears to be well-positioned to begin another leg higher. Dollar weakness, an easing Fed and worries over the global economy may all keep the yellow metal supported in the weeks and months ahead.

Stocks may have entered a win/win situation. If Biden were to win the election, the markets could enjoy massive amounts of government spending and stimulus measures. If Trump is to win, markets may move higher on ongoing tax relief and a less regulatory business environment. If equity markets do continue their upwards trajectory, it begs the question of what could fuel a fresh rise in the gold market.

The bulls have control of the market on the daily charts, but that control appears to be fading a bit. The bullish camp must first take out the $1900 level on the upside and then must challenge the October highs near $1940 to maintain upside momentum. The bearish camp, on the other hand, will look to push prices lower and to challenge the September lows near $1850.

The gold market is moving higher today to kick off the new trading week as the dollar index comes under some pressure. A bullish technical posture as well as some safe haven buying ahead of the rapidly approaching presidential election two weeks away is also playing a role in Monday’s rise.

The same old factors affecting the yellow metal are still very much in play. Hopes for a U.S. stimulus plan are a bit higher today following Nancy Pelosi setting a Tuesday deadline for an agreement with the White House. The President has said that he is closer to the Democrats’ desire for a larger overall package than Congressional Republicans. The Senate is set to vote on the $500 billion plan on Wednesday and a positive vote could set the stage for a sharp rally in equity markets and risk assets.

Outside of the U.S. Presidential election, the general focus remains on the health of the global economy. China recently reported that its economy grew by 4.9 percent for the third quarter. That figure was below expectations, yet still suggests that the globe’s second largest economy is powering back sharply from economic closures seen just months ago. With new cases of COVID-19 seeing a sharp rise recently, any positive economic news may be considered bullish and may be reflected as such in markets.

China is also taking further steps to cement its place at the head of the global economic table. Recent reports suggested that China passed new legislation over the weekend that could help it keep a key economic advantage over the West. The Chinese Government can now reportedly restrict rare earth mineral exports to foreign nations and their companies. Advanced technologies, such as LEDs, are also impacted by the new legislation. The move by the Chinese Government could force more market players to set up shop in China and could put Western companies and nations at a disadvantage. These measures are the most recent escalation in the ongoing war over global trade and a response by the U.S. and/or other Western nations may be expected.

The U.S. is full of uncertainty with the election quickly approaching and with the battle against the pandemic ongoing. The E.U. is also a source of investor angst, however, as a “hard” Brexit may be becoming increasingly likely. U.K. Prime Minister Boris Johnson stated over the weekend that Britain should prepare for a “hard” Brexit of the European Union does not agree to a free trade agreement. The next couple weeks may be critical in the ongoing saga, as it will become increasingly clear whether the two sides are willing and able to meet each other halfway in order to avoid further economic damage. The unknowns surrounding Brexit may keep the yellow metal well supported in the weeks ahead and could even lead to sharp gains for the metal.

All else being equal, a weaker dollar, weaker economy and uncertainty over the election and Brexit may keep the gold bulls on the offensive in the weeks ahead.

The gold market is holding above the $1900 level despite sharply higher stocks. Hope for another round of stimulus spending out of Washington D.C. has investors buying stocks and risk assets even as President Donald Trump remains hospitalized with the COVID-19 virus. Optimism over Trump’s health is also playing a role on Monday following the President’s recent motorcade appearance yesterday.

The recent downside seen in the gold market may be nothing more than a healthy market correction, and that correction may have now run its course. The previously overbought condition has now shifted to an oversold condition, and that oversold condition may lead to buying interest this week that could stabilize the market and further encourage the bullish camp.

The markets certainly have no shortage of factors that could affect price action. As the global economy continues to monitor the spread of the CIVID-19 pandemic, many investors are now likely watching President Donald Trump very closely after he said he tested positive for the virus late last week. Although recent appearances from the President have been encouraging to his followers, his actual health situation remains unclear and the virus is known to cause significant and rapid changes in those who contract it. A serious downturn in Trump’s condition, for example, could fuel a massive flight to safety and sell-off in stocks and risk assets. A rapid recovery, on the other hand, could be viewed as encouraging and could fuel fresh all-time highs in equities in the weeks ahead.

The rapidly approaching U.S. Presidential election will also likely play an increasing role in the metals markets and other global financial markets. The democratic margin of victory has reportedly spread in recent days, and a Biden win could set the stage for a significant shift in investor thinking and market action. A Trump victory, however, could potentially see stocks continue higher while the dollar index weakens further.

The gold market may now turn its attention to the upcoming election as well as any central bank activity. Despite the widening lead for Democratic candidate Joe Biden, markets may see increasing volatility as the election approaches. Trump has seemingly already begun to set the stage for an election outcome disagreement, although the wider Biden’s lead becomes the less likely Trump may have any ground to stand on following the vote. Although a decisive election result may calm some nerves, others may become increasingly anxious over the notion of a Biden victory and what that could mean for markets and the economy. Given current thoughts of increased taxes and tighter regulations, many investors could choose to head for the exits and markets could see a significant downward slope post-election.

Regardless of who wins the November 3rd election, the stage may be set for higher gold prices. The combination of a weaker economy, declining dollar, central bank easing and other factors may be too much for the bears to handle. The value of gold is quite likely to increase in the months and years ahead, as shifting economic and market dynamics fuel the desire for perceived safe haven asset classes.

The gold market is likely seeing some pullback after recent gains as the yellow metal gears up for another run towards fresh all-time highs. The metal has traded largely sideways for a few weeks now, and the longer it moves sideways the more significant the next leg higher could potentially be.

It is difficult, if even possible, to come up with any bearish issues for the gold market and the metal is likely to continue to be bought aggressively on any dips in price that do develop. The Fed’s recent decision to allow inflation to run above its desired 2% target means that interest rates will stay low for some time to come. This ultra-low interest rate environment is bullish for gold, which tends to outperform as rates decrease.

The stock market could hold the key to the yellow metal’s next rally. Stocks have been strong in recent action as investors have become increasingly dependent on central bank action to keep equities on the offensive. Despite the Federal Reserve holding rates at zero and pumping the economy full of liquidity through QE, however, a day may come when investors recognize and acknowledge the difficulties being faced by the global economy. This recognition could potentially lead to a major pullback in equity markets, which currently sit near all-time highs. Such a pullback in stocks could send additional capital flowing into the gold market and other asset classes and could lead to fresh all-time highs for the yellow metal.

The Federal Reserve’s actions could keep ongoing pressure on the U.S. Dollar as well. The dollar index has struggled to maintain any upside above the 93 level, and the euro could have further room to run higher against the greenback. A weaker dollar index could keep buying pressure in gold elevated, as the weaker currency makes gold less expensive for foreign buyers.

The combination of a slowing global economy, weaker dollar, accommodative Federal Reserve and uncertainty over the upcoming U.S. Presidential election may all keep the yellow metal rising while limiting any downside dips in price. The gold bulls are in control of the market on the daily chart, with an uptrend still in place that has lasted the last five months or so. The bulls will target the September highs near $2000 per ounce, while the bears are likely to target support at $1900 per ounce.

Despite all the bullish issues backing the gold market currently, there are some other factors that could lead to a pullback or even reversal in trend. Hopes for a COVID-19 vaccine have intensified in recent days and have fueled the stock market’s upside. If a vaccine is developed and is brought to market, it could potentially provide a shock-and- awe effect on global markets that would likely send stocks higher and safe haven asset classes lower.

The major theme for the week is the U.S. Federal Reserve meeting set to conclude on Wednesday afternoon. The announcement on rates will be followed by a press conference with Fed Chief Jerome Powell who may provide additional clues on the central bank’s plans and thinking.

The gold market is slightly higher in early Monday action as the bulls look to regain control of the market. The market has quite possibly entered a longer consolidation phase in which prices remain mostly sideways for an extended period. A downturn in risk aversion is also having an effect, as investors look past the raging viral pandemic and hope for a credible vaccine to be brought to market sooner rather than later. Whether a vaccine is discovered or not, it remains unlikely that nations will enter into another full-scale lockdown to combat the spread of the virus.

Outside markets for gold today are in a bullish posture. Crude oil is moving higher, near $43.50 per barrel, while the U.S. Dollar index moves lower, maintaining price action near a two-year low. The weaker dollar has likely been a major contributor to gold’s upside in recent months, and a further downside breakdown in the greenback could set the stage for a significant run higher in gold, silver and other metals.

The dollar certainly has a variety of forces working against it currently. Not only is the U.S. way, way in debt, but the Federal Reserve is now keeping interest rates at zero once again, while printing an unlimited amount of dollars through QE. Although a weaker dollar may benefit the government as it pertains to debt payments, it is not beneficial to the average American or user of the currency. As the dollar declines in value, it tanks more and more of them to purchase everyday goods and services. This fuels the effect of making things increasingly expensive, eroding discretionary incomes in the process. Not only that, but even net investment returns are eroded as they cannot escape the negative effects of a weaker dollar.

As Americans and users of the dollar feel the pinch from a decline in value, it can have a significant, negative impact on the economy as a whole. As everyday goods and services become increasingly expensive, people will begin to look to save money, spending less in the process. This downturn in spending can weigh heavily on the economy, as the economy is primarily driven by consumer spending. This reduction in household spending can, in turn, lead to an economic recession if severe enough.

Not only is the greenback being forced to deal with the negativity of zero percent rates and QE, but it must now also contend with a change in the Fed’s thinking. Last week, the central bank announced that it would shift its inflation mandate and would look to see inflation rise above its desired 2% target for a period of time. Rising inflation, combined with all the other bearish dollar issues, could be enough to send the greenback on a fresh and significant leg lower. This dollar downside could fuel a sharp rise in some dollar-denominated asset classes, including gold and silver, and could become the primary catalyst for $3000 or $5000 per ounce gold prices.