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PRECIOUS-Gold slips as likely Republican Senate dents large stimulus hopes

Published 11/04/2020, 10:37 PM
Updated 11/05/2020, 03:30 AM
© Reuters.
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* Stock rally as investors price gridlock in Washington
* Trump wins battlegrounds of Florida, Ohio and Texas
* FACTBOX-Who is winning the U.S. election? * 2020 U.S. ELECTION: What you need to know right now
* Graphic: Global markets since Trump's election in 2016 https://tmsnrt.rs/3mLQXkZ


(Recasts and updates prices)
By Sumita Layek
Nov 4 (Reuters) - Gold prices fell on Wednesday as bets that
the Democrats will be unable to take control of the U.S. Senate
in the razor-edge American election dashed hopes for a larger
U.S. coronavirus stimulus.
Spot gold XAU= fell 0.7% to $1,896.02 per ounce by 1:52
p.m. EST (1553 GMT). U.S. gold futures GCv1 settled down 0.7%
at $1,896.20.
Prices fell more than 1% earlier in the session as the
dollar emerged as the favoured safe haven, with President Donald
Trump falsely claiming victory with millions of votes still
uncounted in the tight presidential race. MKTS/GLOB
"It's becoming quite expected that the senate is not going
to shift towards the democrats and now that we're realistically
in a divided government scenario, we're unlikely to get the same
type of stimulus that the market was hoping for," said Bart
Melek, head of commodity strategies at TD Securities.
Although Joe Biden is tipped to win the election, the
Democrats appeared to be falling short in their attempts to take
control of the U.S. Senate. Biden is expected to inject large amounts of stimulus to
ease the economic fallout of the pandemic. Gold is considered a
hedge against inflation and currency debasement, which are
likely to result from a large stimulus. "But we'll still get something nonetheless. And let's not
forget that the Federal Reserve is extremely accommodative.
There are other routes to stimulus and not all of them are
through the U.S. Congress," Melek added.
The dollar .DXY gave up early gains against rivals, while
stocks rallied as markets waited for the election outcome.
USD/ MKTS/GLOB
"As this election process is starting to drag down, we're
starting to see that there is a slight edge to a Biden victory
outcome and that's why we saw the dollar paring its gains," said
Edward Moya, senior market analyst at OANDA.
"We wanted to have election certainty and obviously didn't
get that. Everyone is trying to figure out how things are going
to unfold and the big risk is that we go to the courts ... that
is going to drive the safe-haven demand."

Silver XAG= fell 1.4% to $23.84. Platinum XPT= rose 0.1%
to $867.34 and palladium XPD= climbed 0.3% to $2,290.42.

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