Last week, we noted that gold’s price consolidation had completed a “pennant” formation. The formation extended into an even tighter consolidation last week, as gold closed at $1,962.10 per ounce (see the following chart). Since this pattern usually precedes a breakout in the direction of the previous trend, we continue to expect another move up in this gold bull market.

Gold Futures Contracts—Daily

The political tension around the upcoming U.S. presidential election was elevated even further with the death of Supreme Court Justice Ruth Bader Ginsburg on Friday. In an already contentious election atmosphere, this vacancy adds fuel to the fire. As a result, gold’s “safe haven” feature could become even more attractive to investors.

Thomas Kirchner and Paul Hoffmeister, portfolio managers at Camelot Portfolios, believe there are also political incentives to keep the U.S. dollar in decline—and gold strong—for both parties: “The weak Dollar helps to boost U.S. exports and create jobs, just in time for the election. Effectively, the weak Dollar is a form of monetary stimulus. This is precisely the effect President Trump has repeatedly mentioned since taking office. No matter the outcome of the November election, the next administration will have no incentive to talk up the Dollar while the economy is still suffering from the Covid slump.”

Rick Andrews is president of Avant Capital Management.