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Gold prices tumbled 2% Wednesday in profit-taking ahead of an anticipated swing in Senate control to President-elect Joe Biden’s Democratic party, that analysts said could result in new stimulus by his administration and new highs for the yellow metal.

Two runoff elections in the state of Georgia showed victory for Democratic candidate Raphael Warnock and a leading vote count for his colleague Jon Ossoff that would put the Democratic Senate representation level with that of the Republicans, allowing Vice-President elect Kamala Harris to break the tie with her vote.

The Democrats already have the House of Representatives, the lower chamber of Congress, in their control. Winning the Senate, the upper chamber, will give them a complete majority in the U.S. legislative assembly and the power to push forward their agenda.

Biden, whose term begins Jan. 20, has hinted that he wants at least two stimulus packages in 2021 to override the economic malaise expected to continue from the coronavirus pandemic. His first order of business might be to push out $2,000 checks to most Americans, a measure stiffly opposed until December by the Republicans.

Analysts have said gold prices, which hit mid-$1,900 levels earlier this week before Wednesday’s profit-taking, was poised for a new run-up that could possibly take the precious metal to $2,000 and beyond as investors buy in as a hedge against Biden’s fiscal measure.

Gold’s slide on Wednesday was also triggered by a surge in bond yields marked by the U.S. 10-Year note, which jumped its most since Dec. 1.

U.S. gold futures for February delivery on Comex settled down $45.80, or 2.3%, to settle at $1,908.60 an ounce.


In post-settlement trade, however, February gold recovered almost a third of those losses, trading at $1,920 by 2:45 PM ET (19:45 GMT). Part of the recovery came as supporters of outgoing president Donald Trump, disgruntled since his November election loss to Biden, stormed into the U.S. Capitol. Their action came after a failed last bid by Trump in Congress to stop Biden from taking office in two weeks.

Analysts were confident that gold would return to the near $1,950 levels it hit this week and push toward the record high of almost $2,090 achieve in August.

“With the trend line/100 day Moving Average as support, and the November high as resistance, the price of the precious metal has defined the boundaries traders should now eye,” said Greg Michalowski on the FX Live platform.

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