* Speculation of Obama win sparks sudden midday
* Others see a surprise victory by Romney lifting US
* Fiscal cliff, other challenges could weaken gold short
By Frank Tang
NEW YORK, Nov 6 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
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
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