Gold Soars in Asia Trading as Trump Gains on Clinton
03 November 2016 - 10:40AM
Dow Jones News
Gold prices zoomed above $1,300 per troy ounce during Asia
trading hours Thursday as new opinion polls showed Republican
Donald Trump closing the gap with Democrat Hillary Clinton in the
U.S. presidential election.
The possibility of a Trump win next week has fanned gold demand
since Monday, overriding bearish sentiment sparked by the
expectation that the U.S. Federal Reserve will raise its key
benchmark rate in December.
A Clinton win would be positive for risky assets such as
equities, while a Trump victory would boost safe-haven assets such
as gold by increasing uncertainty about policies, some analysts
say.
"The reforms that Donald Trump proposes on trade, immigration
and fiscal spending are unconventional and imply large changes,
while there are concerns that geopolitical risk would rise," an ABN
Amro report said. "This is adding to the uncertainty now that the
election result remains too close to call."
After reaching above $1,300 per troy ounce in the Asia morning,
gold was trading $4.60 higher, at $1,301.60 per troy ounce, in the
afternoon.
"I think the rate hike is pretty much priced into the gold
market now. What we are seeing is safe-haven buying," said Daniel
Hynes, commodity analyst for ANZ Bank.
"If Trump is successful, we could see gold rally in the
immediate aftermath of election," he said. "Even if he does not
[win], gold prices should hold up well." Mr. Hynes added that
quantitative easing in Europe and elsewhere would provide a layer
of support to gold.
The most recent polls available show Mr. Trump gaining on Mrs.
Clinton, according to RealClear Politics' roundup of polls. The
most recent, from the University of Denver on Thursday, showed the
two in a dead heat, with 39 percentage points each. The latest ABC
News/Washington Post tracking poll, released Wednesday, showed each
candidate with 46 percent.
Robust physical demand in India and China—which account for
about half of world demand—is also supporting gold prices.
The metal had fallen below the $1,300 level in early October
amid increasing expectations that the Federal Reserve would raise
interest rates before the end of the year. That expectation had
strengthened the U.S. dollar and pushed down gold prices. The two
asset classes typically have an inverse relation.
On Wednesday, the U.S. Federal Reserve left interest rates
unchanged, as expected, while hinting that it expects to raise them
in December. Investors will also be watching the U.S. jobs data on
Friday for indications about the country's economy.
The tide began turning in favor of gold this week as polls
signaled the presidential race was tightening after the director of
the Federal Bureau of Investigation said the law enforcement agency
was reviewing new emails discovered connected to Mrs. Clinton's
private server in an unrelated case.
Write to Biman Mukherji at biman.mukherji@wsj.com
(END) Dow Jones Newswires
November 03, 2016 05:25 ET (09:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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