Gold Gains for 2nd Day as Dollar Weakens Before U.S. Vote

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

U.S. voters decide 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. The U.S. dollar weakened against a six-currency basket.

Gold for immediate delivery advanced 0.3 percent to $1,690.78 an ounce in London. Gold for December delivery rose 0.5 percent to $1,691 an ounce on the Comex in New York.

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 may 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 8.1 percent this year as central banks including the Federal Reserve took steps to shield their economies hurt by Europe’s crisis.

Silver for immediate delivery rose 0.6 percent to $31.3675 an ounce. Spot platinum advanced 0.4 percent to $1,548.74 an ounce. Palladium added 0.3 percent to $614 an ounce.