Gold price drops below $1,300 as stocks stabilize
London (Nov 3) Gold futures on Thursday pulled back from their highest finish in a month as the dollar and stocks, hit this week by U.S. election uncertainty, nursed their losses.
Gold futures pushed below the key $1,300-an-ounce level intraday. The metal had held this closely watched line despite volatile after-hours trading on Wednesday when the U.S. Federal Reserve left interest rates unchanged but said the case for an increase in rates “has continued to strengthen.”
By market reckoning, that leaves open the door for a rate hike in December. Gold tends to lose demand to interest-bearing investments in a rising-rate climate, although other factors, including political jitters, continue to underpin precious metals.
“The market will probably only be willing to fully price in the rate hike if [Democratic nominee Hillary] Clinton wins the election,” said commodities analysts at Commerzbank, led by Carsten Fritsch, in a note. “In this case, gold could come under pressure again. At present, the Fed fund futures put the probability of a December rate hike at somewhat more than 60%.”
Early Thursday, gold for December delivery GCZ6, -1.60% fell $14, or 1%, to $1,294.20 an ounce. Gold on Wednesday settled at $1,308.20 an ounce. It hadn’t topped $1,300 or settled at a level this high since Oct. 3, according to FactSet data.
December silver SIZ6, -3.47% fell 51 cents, or 2.7%, to $18.19 an ounce.
Gold retreated even as the dollar dipped, although the buck’s drop was nowhere near the decline logged earlier this week. The ICE dollar index DXY, +0.02% , a measure of the U.S. unit against a basket of six major rivals, slipped 0.1%. The dollar fell in particular against a surging pound after a U.K. court handed a blow to the Brexit plan. A weaker dollar can provide a boost to commodities priced in the currency, including precious metals, as it makes them cheaper to users of other currencies.
U.S. stocks were showing signs of stabilizing Thursday after a tightening U.S. presidential race helped account for the S&P 500 notching its longest losing streak in five years on Wednesday, as investors fled to safer harbors, including gold.
Among exchange-traded funds, the SPDR Gold Trust GLD, +0.74% edged up by 0.2% premarket, while the VanEck Vectors Gold Miners ETF GDX, -0.81% fell 0.4%.
Source: MarketWatch
