Gold recovers from 9-week low ahead of US election

Tue Nov 6, 2012 5:11am GMT
 

By David Brough

LONDON (Reuters) - Gold prices firmed a touch on Monday after posting their biggest one-day drop since mid-June in the previous session as investors took to the sidelines ahead of Tuesday's U.S. presidential election.

Gains in the metal were limited by weakness in stock markets and a rise in the dollar, however, as low-risk assets rose at the start of a week in which the United States votes in a new president.

The U.S. elections will be closely watched by financial markets, with incumbent Barack Obama seen as more supportive of continued stimulus measures, while Republican challenger Mitt Romney is expected not to favour additional easing.

A Romney team sceptical of strong Federal Reserve stimulus would be unlikely to renominate Fed chief Ben Bernanke for a third term in 2014.

"Although the race is close, I think if Romney won, it would be a shock to the market," said Mitsubishi precious metals strategist Matthew Turner.

"The general expectation is of an Obama victory, which is more of the same. That's bullish for gold," he added, referring to expectations for a continuation of relaxed monetary policy, which will stoke inflation concerns and keep interest rates low.

Spot gold was up 0.4 percent at $1,682.66 at 1421 GMT, having earlier touched a nine-week low of $1,672.24. U.S. gold futures for December rose $7.50 to $1,682.70.

Prices slid more than 2 percent on Friday after better than expected U.S. jobs data lifted the dollar and reduced pressure on the U.S. authorities for a continuation of its ultra-loose monetary policy.   Continued...

Gold bars are displayed at South Africa's Rand Refinery in Germiston May 30, 2006. REUTERS/Siphiwe Sibeko

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