By Luzi Ann Javier and Kevin Crowley
Bloomberg
Donald Trump’s improving odds in the U.S. presidential race are causing jitters in the market, prompting investors to seek safety in gold.
Bullion surged above $1,300 an ounce for the first time in almost a month after polls showed Trump gaining ground in next week’s elections, spurring a sell-off in world equities and industrial metals and weakening the dollar. Trump led Hillary Clinton by one point in an ABC News/Washington Post tracking poll on Tuesday, while a Bloomberg survey of independents gave Clinton a slim advantage.
Gold has rebounded from a four-month low in October as political and economic uncertainty outweighed expectations of a Federal Reserve interest rate increase. In advance of an announcement from Fed policy makers Wednesday afternoon, traders were pricing in a 67 percent chance that U.S. borrowing costs will go up next month. Higher borrowing costs curb the appeal of non-interest bearing gold.
“There’s nervousness in the market over a Trump win and that’s driving gold higher,” James Cordier, the founder of Optionsellers.com in Tampa, Florida, said in a telephone interview. “What usually happens is the candidate with the most momentum at the end is the one who wins and Trump definitely has momentum right now. It’s not what the market has been factoring in for the last 60 days.”
Gold futures for December delivery gained 1.6 percent to settle at $1,308.20 an ounce at 1:41 p.m. on the Comex in New York, the highest close since Oct. 3. Silver futures advanced 1.5 percent on the Comex.
Bullion’s rise has been boosted by Friday’s news that FBI Director James Comey had alerted members of Congress that agents had discovered a new batch of e-mails that could be part of an earlier investigation into Clinton’s use of a private e-mail system while she was secretary of state.
Investors boosted their holdings of exchange-traded funds backed by gold for a fourth straight session Tuesday to 2,042.9 metric tons, near the highest since 2013, data compiled by Bloomberg show.
The Bloomberg Industrial Metals Subindex fell after seven straight sessions of gains that was the longest streak since March.
“What we’re seeing today is very much a safe haven trade with commodities getting hit hard,” said Naeem Aslam, chief market analyst at Think Markets U.K. Ltd. in London. “We had good numbers from China yesterday but that’s now been overshadowed by the risk of a Trump presidency, which hadn’t been priced in.”
A group of 370 economists including several Nobel Prize winners released a letter Tuesday saying Trump is a “destructive choice for the country” as he “promotes magical thinking and conspiracy theories over sober assessments of feasible economic policy options.” Peter Navarro, Trump’s economic adviser and a University of California at Irvine economist, said the letter was “an embarrassment to the corporate offshoring wing of the economist profession” and added that Trump’s economic plan would boost growth.
Zinc and aluminum had the biggest percentage decline on the London Metal Exchange, while copper, nickel, lead and tin also fell.
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