Gold steadies as dollar pares gains; focus on US election, Fed

Reuters: Gold steadied on Monday, coming off lows as the dollar pared gains, though concerns over the outlook for the US election and Federal Reserve policy kept the metal pinned near the previous session’s highest level in nearly four weeks.

The dollar was up around 0.1% versus a basket of major currencies while global equity prices steadied after the Federal Bureau of Investigation announced it was taking a new look at Hillary Clinton’s use of a private email server while she was secretary of state.

Spot gold was up 0.03% at $ 1,276.34 an ounce by 3:10 p.m. EDT (1910 GMT), hovering below Friday’s peak of $ 1,284.14 and on track to close October down 3.1%. US gold futures for December delivery settled down 0.3% at $ 1,273.10.

Physical demand has been very quiet, Afshin Nabavi, head of trading at MKS in Switzerland, said. “Everything is stuck, with the (November 8) elections in the United States, and the non-farm payrolls on Friday. We have had a $ 25 range every day.”

The metal hit its highest since October 4 on Friday after the FBI’s announcement shook up markets that had priced in a Clinton victory over Republican Donald Trump, prompting losses in stocks and the dollar.

“People had been presuming the election was a done deal for Clinton,” said Natixis analyst Bernard Dahdah. “If this means her lead is reduced, the gold market could benefit from that uncertainty.”

The market was quiet ahead of the US Federal Reserve meeting on Tuesday and Wednesday, and October US payrolls data on Friday.

While hardly anyone expects Fed Chair Janet Yellen and other Fed policymakers to raise interest rates only a week before the election, they appear to have left themselves the December meeting to deliver a rate rise in 2016.

“I don’t think anyone’s expecting a Fed hike this week. That (Fed meeting) will give more clarity for a December rate hike odds,” said one gold trader in Toronto.

Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.

Silver was up 0.6% at $ 17.83 an ounce but poised to post a monthly decline of around 7%.

Platinum was down 0.6% at $ 973 and set to record its third consecutive monthly drop while palladium, down 0.5% at $ 616.50, was heading for its biggest monthly drop since November, down more than 14%.