Gold Price Resilient, Wall St. Plunges after Obama’s Win
By jturbin | November 8, 2012 2:58 AM EST
GOLD PRICE NEWS – The gold price held steady near $1,715 per ounce on Wednesday morning despite widespread liquidation across financial markets in the aftermath of U.S. President Barack Obama’s election win. The spot price of gold climbed to an overnight high of $1,733, but fell back toward unchanged as the U.S. dollar rallied and the large majority of the commodities complex turned sharply lower.
With Obama winning his re-election bid, the focus in Washington, D.C. is now likely to shift to the looming fiscal cliff – a series of tax increases and spending cuts that are scheduled to take effect at the start of 2013. As was the case last time the U.S. debt ceiling was a major headwind – in the summer of 2011 – the gold price has once again begun to display a considerable amount of resiliency in the face of broad-based weakness in U.S. dollar-denominated asset classes.
UBS precious metals strategist Edel Tully contended that “All in all, gold could not have asked for a better outcome” from the U.S. election.
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Silver fared worse than the price of gold this morning, as it dropped by $0.35, or 1.1%, to $31.70 per ounce. Other precious metals came also came under pressure, as platinum futures slid 1.0% to $1,542.80 per ounce and palladium retreated by 1.9% to $608.50 per ounce. As for cyclical commodities, copper futures fell by 1.9% to $3.44 per pound while crude oil tumbled 3.4% to $85.72 per barrel.
Gold stocks posted only modest losses – sharply outperforming the broader equity markets in the process – as the stability in the gold price helped buoy the sector. The Market Vectors Gold Miners ETF (GDX) dipped by $0.18, or 0.$%, to $50.16 per share while the S&P 500 Index dropped by 1.8% to 1,402.12. The Dow Jones Industrial Average (DJIA) also briefly fell below 13,000 for the first time since August 3rd.
Following Obama’s victory, several strategists reiterated their bullish outlooks for the price of gold. David Govett, head of precious metals at Marex Spectron, wrote in a report to clients that “We will see a continuation of the loose monetary policies pursued by the Fed and Chairman Bernanke, for the foreseeable future. Low interest rates and more quantitative easing all add up to favourable metal prices.”
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