Gold falls the most in a month as FBI’s late verdict favours Clinton

Odds of a Clinton win rises a day before Americans vote on November 8

PUBLISHED : Tuesday, 08 November, 2016, 12:27am
UPDATED : Tuesday, 08 November, 2016, 12:27am

Gold retreated the most in a month as investors speculated Hillary Clinton is moving closer to winning the US presidential election.

Bullion for immediate delivery slumped as much as 1.6 per cent to $1,283.80 an ounce. Prices broke a seven-day rising streak after the Federal Bureau of Investigation decided to stick to its previous view that Clinton’s handling of her e-mails wasn’t a crime.

Gold prices added 2.3 per cent last week as opinion polls narrowed and investors priced in a higher chance of Republican Donald Trump capturing the White House. Citigroup sees gold rallying to US$1,400 an ounce if he wins and ABN Amro Bank NV forecasts $1,350 an ounce by the end of the year on a Trump victory.

“With the chances of a Trump victory retreating, gold is dropping back today,” Georgette Boele, an Amsterdam-based analyst at ABN Amro, said by phone. “If you have a Clinton victory, the gold price could go quite a lot lower.”

Gold’s moves have become more closely linked to the US election in recent days. The final Bloomberg Politics national poll before Tuesday’s election has Clinton ahead of Trump, 44 per cent to 41 per cent, when third-party candidates are included.

“Even if Clinton wins, the chances are both houses will return Republican majorities and she will be a fairly lame duck President, which in turn should benefit gold in the long run,” David Govett, a London-based analyst at Marex Spectron, said by email.

Fear of Trump sends gold flying above US$1,300 as investors seek safe haven

Adding to the headwinds for bullion, the US Labor Department on Friday reported that the unemployment rate fell and hourly earnings edged higher, boosting the outlook for an interest rate rise.

As polls last week showed a dwindling lead for Clinton, hedge funds piled into the perceived safety of bullion, increasing wagers that the metal would rally, US government data showed on Friday. The gold net-long position jumped 14 per cent to 172,532 futures and options contracts in the week to November 1.

Holdings in exchange-traded funds backed by gold shrank 0.72 tonne to 2,044 tonnes as of Friday, the first drop in a week, according to data compiled by Bloomberg. The Bloomberg Dollar Spot Index, which measures the US currency’s performance against a basket of 10 major counterparts, rose as much as 0.5 per cent following a six-day, 1.4 per cent loss.