Gold gains second day as the U.S. votes for president

Gold rose for a second day in New York before the U.S. presidential election that may determine the direction of monetary and fiscal policy in the largest economy.

U.S. voters decide today between giving President Barack Obama another four years in office or changing course with Republican challenger Mitt Romney. The Fed said Oct. 24 it will maintain $40 billion in monthly purchases of mortgage debt and probably hold interest rates near zero until mid-2015.

“An Obama win would be the best-case scenario for gold, both from its implications for both monetary and fiscal policy,” Edel Tully, a London-based analyst at UBS AG, said in a report today. “If Romney wins, we expect gold’s knee-jerk reaction to be negative, and we look towards $1,647 for initial support, the Aug. 31 low, with the potential for a deeper follow-through.”

Gold for December delivery rose 0.5 percent to $1,692 an ounce by 7:33 a.m. on the Comex in New York. Gold for immediate delivery advanced 0.4 percent to $1,691.13 an ounce in London.

Gold futures may initially rally to $1,725 an ounce before further gains if Obama wins, according to UBS. They jumped 4.2 percent on Nov. 4, 2008, the day Obama was elected, and more than doubled during the four years of his presidency.

Election Aftermath

Bullion’s rally may be at risk if Romney wins as he may replace Federal Reserve Chairman Ben Bernanke at the end of his term and easing could end earlier than expected, Francisco Blanch, commodities research head at Bank of America Merrill Lynch, said yesterday. UBS’s Tully said Romney’s election may lead to a united government and stronger dollar, hurting gold.

Bullion rallied 8 percent this year as central banks including the Federal Reserve took steps to shield their economies hurt by Europe’s crisis. The U.S. dollar was little- changed against a six-currency basket.

Gold rose to $1,691.75 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,683.50 yesterday afternoon.

Silver for December delivery rose 0.8 percent to $31.375 an ounce. Platinum for January delivery advanced 0.3 percent to $1,546.50 an ounce. Palladium for December delivery jumped 1.7 percent to $613.15 an ounce.

Bloomberg News

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