November 7, 2016
Bullion Retreats With Haven Assets as FBI’s Twist Favors Clinton
(Bloomberg) - Gold retreated, joining a slide in other haven assets, after the Federal Bureau of Investigation said it maintains the view that Hillary Clinton’s handling of her e-mails wasn’t a crime, boosting the Democrat in the final stretch of the U.S. presidential election campaign.
Bullion for immediate delivery lost as much 1.3 percent to $1,288.11 an ounce and was at $1,292.39 at 12:15 p.m. in Singapore, according to Bloomberg generic pricing, as the dollar rose for the first time in seven days. Last week, the metal surged 2.3 percent amid concern Republican Donald Trump may capture the White House, with Citigroup Inc. seeing a rally to $1,400 if he won.
Bullion prices have traded in recent weeks as a barometer of Trump’s chances of winning the contest even as investors also track U.S. data to gauge the likelihood of higher interest rates. The FBI is sticking to its conclusion that Clinton’s handling of her e-mails as secretary of state wasn’t a crime, the bureau’s director, James Comey, said in a letter. On Oct. 28. Comey had said the FBI was examining new e-mails, roiling the election race and lifting gold.
“It looks like the market is overwhelmingly pricing in a Clinton victory,” Vyanne Lai, an economist at National Australia Bank Ltd. in Melbourne, said by phone. “The U.S. dollar has jumped, which in turn is weighing on gold prices. You can see there’s some sort of a relief rally in the equity market as well.”
Gold fell in Asia on Monday together with the yen and the Swiss franc, while equities and equity futures rose, as investors recalibrated their expectations of the race after the FBI’s second intervention. U.S. electors head to the polls on Tuesday, although millions of early votes have already been cast.
Adding to the headwinds for bullion, the Labor Department on Friday reported that the unemployment rate fell while hourly earnings edged higher, boosting the outlook for a rate rise. Federal Reserve Bank of Atlanta President Dennis Lockhart signaled the central bank is on track to raise rates next month, provided nothing intervenes to give policy makers pause.
As polls last week showed a dwindling lead for Clinton, hedge funds piled into the perceived safety of bullion, increasing wagers that the metal would rally, U.S. government data showed on Friday. The gold net-long position jumped 14 percent to 172,532 futures and options contracts in the week to Nov. 1.
Holdings in exchange-traded funds backed by gold shrank 0.72 metric ton to 2,044 tons as of Friday, the first drop in a week, according to data compiled by Bloomberg.
The metal’s decline in China was less pronounced amid a weakening of the yuan. Bullion of 99.99 percent purity dropped as much as 0.3 percent to 282.2 yuan a gram ($1,295.61 an ounce) on the Shanghai Gold Exchange.
On global markets, spot silver lost as much as 1.6 percent. Platinum fell 0.2 percent, while palladium was little changed.