Gold steadies as US election jitters offset solid US data

LONDON:

Gold steadied yesterday, heading for its biggest weekly rise since mid-September as jitters over next week’s US election offset a solid payrolls report that shored up expectations for a US interest rate hike next month.

The dollar gained and US stock markets were set to open slightly higher, outperforming losses for counterparts in Europe and Asia, after the upbeat US jobs data added to the case for a December rise in interest rates. That would weigh on non-yielding gold. However, an initial dip in the metal was quickly bought as investors remained on edge ahead of Tuesday’s election.

Spot gold was at $1,303.83 an ounce at 1315 GMT, off a low of $1,295.71 in the immediate wake of the payrolls data but little changed from $1,303.25 on Thursday. US gold futures for December delivery were up 0.1 percent at $1,303.40.

“The payrolls data is not (positive) enough to drive prices in a particular direction,” ING’s head of commodity strategy Hamza Khan said. “It’s all going to be about the election on Tuesday. A Trump win would signal a positive direction for gold, so that’s the bigger thing to watch.”

The dollar index was still on track for its biggest weekly drop since mid-August after the Federal Bureau of Investigation said last week it was reopening a probe into Democrat candidate Hillary Clinton’s use of a private email server while Secretary of State. The FBI announcement yesterday narrowed Clinton’s lead over her Republican rival Donald Trump, polls showed, rattling financial markets which had been pricing in a Clinton victory. That helped send gold to a one-month high on Thursday, and has put it on track to rise 2 percent this week.

“Gold implied volatility rallied sharply across the curve over the past week, as investors rotated to safe haven assets after polls tightened,” Citi said in a note. “As the election keeps driving gold prices in the short-term, we expect gold vol to remain elevated into Election Day.” Gold prices in India swung to a discount this week as a rally in prices dampened retail demand and prompted jewellers to reduce purchases, while buying in leading consumer China rose due to safe-haven buying. —Reuters