PRECIOUS-Gold jumps 2 pct on Obama bets, technical bounce

Tue Nov 6, 2012 4:07pm EST

Related Topics

* Speculation of Obama win sparks sudden midday
rally-traders
    * Others see a surprise victory by Romney lifting US
equities
    * Fiscal cliff, other challenges could weaken gold short
term


    By Frank Tang
    NEW YORK, Nov 6 (Reuters) - Gold jumped about 2 percent on
Tuesday as traders bet that a possible Barack Obama victory in
the U.S. election would mean further Federal Reserve stimulus,
and prices also got a technical bounce from a support level.
    After trading slightly higher throughout the morning, the
metal suddenly jumped $20 in what some gold traders and fund
managers called "an Obama rally," speculating that four more
years of a Democrat in the White House would contribute to an
extension of the Fed's easy monetary policy. 
    Strong rallies in crude oil and U.S. equities also fueled
gold buying.
    Some analysts also cited technical buying after gold
rebounded from support at its 100-day moving average in the last
several sessions. They said gold was due for a rally on charts
after its recent pullbacks had sent prices near a perfect bottom
around $1,660 an ounce.
    "Gold rallied in oversold conditions because early poll
indications suggested Obama could win, and that bolstered hopes
of Bernanke and Fed stimulus," COMEX gold options floor trader
Jonathan Jossen said.
    But some market watchers suggested Wall Street's gain was
boosted by bets that Republican Mitt Romney could pull off a
surprise victory, which lifted defense and energy shares. 
    Major TV news networks have agreed to shield early exit poll
data suggesting who is leading in a state until the state's
polls close. This means the first indications of the
neck-and-neck race should be coming in around 8 p.m. EST. (0 1 00
GMT) [ID: nL1E8M5G73]
    Analysts say a Republican team that has criticized Fed
stimulus would be unlikely to renominate Fed Chairman Ben
Bernanke for a third term in 2014.
    Spot gold gained 1.9 percent to $1,716.35 an ounce by
3:47 p.m. EST (2047 GMT), sharply above a nine-week low of
$1,672.24 set on Monday. 
    U.S. COMEX gold futures for December settled up
$31.80 at $1,715, with trading volume almost 10 percent above
its 250-day average, preliminary Reuters data showed.
    Gold rose near $1,800 an ounce last month on central-bank
stimulus measures but the rally has faded as encouraging U.S.
economic data including last Friday's strong jobs data lowered
optimism driven by monetary policies.
    Silver, which tends to track gold but can be more
volatile, jumped 2.9 percent to $32.04 an ounce.
    
    FISCAL CLIFF HANGING
    Investors will also watch Congressional races that could
affect the "fiscal cliff," or $600 billion in spending cuts and
tax increases that are set to be automatically triggered at the
end of the year. 
    "I think the market will retrace a lot of this gain after
the election as we still have other uncertain factors for gold
such as the fiscal cliff," said Frank McGhee, head metals trader
of Integrated Brokerage Services LLC.
    Given the Republicans are expected to retain control of the
U.S. House of Representatives, a victory for Obama would be seen
as raising the risk of policy paralysis.
     Worries about a slowing economy because of the fiscal cliff
could weigh on gold. However, huge economic uncertainty related
to the first U.S. fiscal cliff in 2011 had boosted safe-haven
demand and sent gold to a record high.
    Among platinum group metals, platinum was up 0.8
percent at $1,552.25 and palladium rose 1.1 percent to
$615.80. 
 3:47 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold DEC   1715.00  31.80   1.9  1683.50 1720.90  165,307
 US Silver DEC  32.034  0.906   2.9   31.070  32.275   47,288
 US Plat JAN   1558.30  15.60   1.0  1539.10 1564.50    9,726
 US Pall DEC    620.15  17.15   2.8   610.75  621.65    3,758
                                                              
 Gold          1716.35  32.36   1.9  1684.13 1720.40         
 Silver         32.040  0.890   2.9   31.100  32.230
 Platinum      1552.25  13.01   0.8  1540.25 1558.49
 Palladium      615.80   6.83   1.1   609.77  619.50
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        187,960   147,521   176,015     16.75    0.68
 US Silver       55,459    40,861    55,593     25.88    0.32
 US Platinum      9,911    11,311     9,382      19.2    0.64
 US Palladium     4,259     3,458     4,457
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