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Gold dips as stocks, dollar firm ahead of U.S. election outcome

Reuters  |  BENGALURU 

By Verma

BENGALURU (Reuters) - Gold fell on Tuesday as U.S. equities and the dollar firmed ahead of the outcome of in the United States, denting the precious metal's appeal.

Spot gold fell 0.4 percent to $1,226.46 per ounce as of 2:26 p.m. EST (1926 GMT), while U.S. gold futures settled down $6, or 0.49 percent, to $1,226.30.

"It seems that the equity markets are doing pretty well ahead of the results of the elections. Unless we see any surprises in the elections gold will continue to stay range bound between $1,215 and $1,235," said Walter Pehowich, of at

U.S. stocks rose and the dollar firmed, but the moves were limited by investor caution about the elections. [USD/] [.N]

The midterm marks the first major test of U.S. Donald Trump's sweeping tax cuts and hostile trade policies. Polls point to his losing control of the which could curb some of his policymaking power.

"These elections could be important for gold if they slow the strength of the U.S. dollar, which has been a major headwind to gold this year, or stoke uncertainty among U.S. in gold should Trump lose support," analysts said in a note.

"We maintain a positive view towards gold, and believe prices are likely to extend their gains towards $1,300 per ounce, especially if the U.S. dollar weakens after the U.S. midterm elections."

Market participants also waited for a two-day Federal Reserve meeting starting on Wednesday to gauge the outlook for U.S. monetary policy, analysts said.

While the Fed is expected to keep interest rates steady, markets will look for insight into the central bank's view on future interest rate increases. Higher rates discourage the buying of non-interest-paying bullion, which is priced in dollars.

"People are adjusting portfolios for the Fed meeting, that is what is in most investors' minds right now," said Michael Matousek, at

"Going into the next couple of days gold trading should be pretty light, so we'll move around a bit. Nobody wants to hold big positions or make big changes before the Fed meeting."

Indicating investor sentiment towards gold, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust , fell for the second straight session to 757.29 tonnes on Monday. [GOL/ETF]

Silver fell 0.7 percent to $14.53 per ounce while palladium declined 1.7 percent to $1,113.47.

gained 0.5 percent to $868.40 per ounce, having touched its highest since June 25 at $875.70 earlier in the session.

(Reporting by Verma in Bengaluru; Editing by and Bernadette Baum)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Wed, November 07 2018. 02:30 IST