Gold (XAU/USD) extends its bullish move into a third straight day on Friday, finally breaking through the $1900 mark while adding 1% a day. The main catalyst behind gold’s rally remains the persistent downward pressure on the safe-haven US dollar.

The dollar index.DXY, which was down 0.2% against its rivals, was headed for a second straight weekly fall. Renewed hopes for another fiscal stimulus pulled the dollar lower and raised expectations of a pick-up in inflation, said Howie Lee, an economist at OCBC Bank. Lee said that “The $1,900-level is a sticky one and, in my opinion, gold is going to trade around this level until the (U.S.) presidential elections.”

Gold, widely viewed as a hedge against inflation and currency debasement, has surged nearly 26% this year, boosted by unprecedented stimulus from governments and major central banks to cushion the pandemic’s economic impact.

Fitch Solutions said in a note that “We expect gold prices to continue to gather strength as market volatility rises with the November U.S. presidential elections fast approaching, albeit with ebbs and flows.”

In an interview, Trump said there was a good chance a deal over COVID-19 relief could be reached, but gave no details of such a pact. Meanwhile, House of Representatives Speaker Nancy Pelosi said legislation to help airline companies survive the pandemic fallout could only move through Congress with guarantees that a comprehensive aid bill would be developed too.

Trump’s likely return to the public engagements combined with hopes of a Joe Biden win at the November Presidential election supports the market mood, adding to the weight on the greenback. A Biden presidency could imply the likelihood of a large stimulus package.

XAUUSD 4 Hour Chart:

Support: 1884.0 (S1), 1873.6 (S2), 1865.3 (S3).

Resistance: 1902.7 (R1), 1911.1 (R2), 1921.4 (R3).

The yellow metal enjoys in the prevailing downward pressure on the greenback, we expect a bullish trend for XAU/USD.