Gold prices turned lower on Tuesday as the dollar and global equity markets firmed with investors growing more convinced that Democratic candidate Hillary Clinton could win the US presidential election. At the end of a bruising political campaign, the Reuters/Ipsos States of the Nation poll gave Clinton a 90 percent chance of defeating Republican Donald Trump and said she was on track to win 303 Electoral College votes, more than the 270 needed, with Trump likely to get 235.
"If there is any consistency between how the gold market is trading and what polls are saying, the gold market is leaning towards Clinton winning, which means that a downward move will likely be less significant than an upward move in the case of a Trump victory," Danske Bank senior analyst Jens Pedersen said.
Spot gold fell 0.3 percent to $1,277.16 an ounce by 3:21 p.m. EST (2021 GMT), after posting the biggest daily loss in a month on Monday. US gold futures settled down 0.4 percent at $1,274.50 per ounce. A win by Trump, a businessman who has never held public office, would create more uncertainty in the market and that could raise gold's appeal as a hedge against risk, analysts said.
"The problem with a Trump victory is that nobody knows what his policies will be and there will be a limbo between now and when he is inaugurated, which would be bad for the equity markets and bullish for gold," Societe Generale analyst Robin Bhar said. Markets also continued to be wary of the implications of the US election outcome on an anticipated interest rate hike by the Federal Reserve next month.
"Certainly the gold market doesn't think there's going to be a strong likelihood that Ms Clinton loses here," said Bart Melek, head of commodity strategy for TD Securities in Toronto. Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets, while boosting the dollar, in which the metal is priced.
Silver rose 0.8 percent to $18.35 an ounce. Platinum was up 0.1 percent at $1,001.75, after hitting $1,014.80, its highest since Oct. 3. Palladium rose 1.8 percent to $663.50, after reaching the highest since Oct. 11 at $668.20.