Gold hovers near 9-week lowComment on this story
Gold steadied near a nine-week low on Tuesday as investors assessed potential policy impact from the neck-and-neck US presidential election, while a strike in Greece to protest austerity cuts also kept sentiment cautious.
Spot gold rose 0.36 percent to $1,690.30 by 13:27 SA time, but stayed close to Monday's nine-week low of $1,672.24. US gold futures for December rose $6.00 to $1,689.20.
Prices slid more than 2 percent on Friday after stronger than expected US jobs data lifted the dollar.
Investors were also alert to the start of a 48-hour strike on Tuesday by tens of thousands of Greek workers to protest a new round of austerity cuts.
President Barack Obama and Republican challenger Mitt Romney face the verdict of US voters on Tuesday after a long and bitter White House campaign, with polls showing them deadlocked in a race that will be decided in a handful of states where it is extraordinarily close.
Some analysts say a win by Obama could boost bullion, keeping Ben Bernanke at the helm of the Federal Reserve and maintaining ultra-easy monetary policy, while a win by Romney would be a positive for stocks on business-friendly policies and tax cuts.
Cash printing by central banks boosts gold's appeal as it keeps interest rates at a low level, reducing the opportunity cost of holding the metal that has no yield outside its actual value.
Gold had jumped to nearly $1,800 an ounce last month on central bank stimulus measures, but has since eased.
“If Obama wins we would be certain Ben Bernanke would remain in office as Federal Reserve chairman at least until his normal term expires,” Peter Fertig, a consultant with Quantitative Commodity Research, said, adding that an Obama victory would signal a continuing relaxed monetary policy.
“The overriding sentiment in the gold market after the election will be the outcome in dealing with the looming fiscal cliff,” Fertig said.
With the Republicans seen retaining control of the US House of Representatives, a victory for Obama would be seen as raising the risk of policy paralysis.
If Congress cannot agree new arrangements, about $600 billion in government spending cuts and higher taxes will kick in early next year, with the so called fiscal cliff seen hurting US economic growth while underpinning safe-haven assets.
HSBC said in a note that the outcome of the US election is likely to determine the direction of gold short term.
“A Romney victory in the presidential race could push interest rates up and that an Obama re-election could lower them,” it said.
“Lower interest rates historically have helped gold prices and higher rates have been gold-negative.”
Gold importers in India stayed on the sidelines awaiting price directions ahead of potential policy spin-offs from the US presidential elections.
AngloGold Ashanti, the world's third largest bullion producer, has suspended operations at Mponeng mine in South Africa after a sit-in protest, the company said on Tuesday.
Gold is expected to remain above a support zone of $1,675-$1,678 per ounce for one more trading session, as there is no indication of a break below this zone, according to Reuters market analyst Wang Tao.
Spot platinum was up 0.34 percent at $1,544.43 and spot palladium rose 0.33 percent to $610.97.
Silver was up 0.42 percent at $31.28 an ounce. - Reuters