Gold retreats in volatile session as market digests election outcome
WASHINGTON (MarketWatch) -- Gold futures dropped as much as $14 an ounce Wednesday, ready to break a two-session winning streak as traders digested the outcome of the U.S. presidential election.
"Now that at least one major uncertainty is out of the way - the small matter of the U.S. presidency - markets are now confronted with a myriad of other financial and economic uncertainties," said Mark O'Byrne, a director at Gold and Silver Investments Ltd.
"Indeed, conditions now are arguably more uncertain now than at any time since the 1970's and even the 1930's," he said.
Gold for December delivery fell by $11.30, or 1.5%, to $746 an ounce on the Comex division on the New York Mercantile Exchange.
The electronic contract, which updates more frequently than the benchmark Comex contract, recently traded at $745.70, down $11.60 on Globex. It traded between a low of $743 and a one-week high of $770 overnight in volatile trading.
Prices had gained $39.10, or 5.4%, in the past two sessions.
"We said some weeks ago that the recent sell-off in precious metals was likely to end around Election Day and believe that this has indeed happened and that gold will resume its secular bull market in the coming weeks," said O'Byrne.
"Important elections often see markets reverse course and witness trend reversals, and this is one of the most momentous election victories in U.S. history," he said in a note to clients.
Sen. Barack Obama rode massive voter turnout to a sweeping victory over Sen. John McCain in Tuesday's presidential contest, becoming the first African-American elected as the nation's chief executive. See full story.
But a potentially deep U.S. recession and the direst global financial crisis since the Great Depression will give Obama little time to bask in the afterglow of his historic win, economists said Wednesday. See full story.
Ned Schmidt, editor of the Value View Gold Report, said he believes that the "policies of the next president will further weaken the financial strength of the U.S." and that tax and spending policies will drive more money out of the country.
A "dollar crisis [is] likely to develop as a result of [the] election," he said in emailed comments. "Investors should be buying gold aggressively."
Concerns about an economic recession as well as weakness in the dollar had been providing support for gold prices recently.
On Wednesday, the dollar index , a measure of the greenback against a trade-weighted basket of six currencies, was last at 84.424, down from 84.533 late Tuesday. See Currencies.
Copper drops back; other metals rise
Copper prices lost ground after rising more than 6% in the previous session.
Copper for December delivery was at $1.855 a pound, down 10.3 cents, or 5.3%.
Other metals inched higher, with December silver up 15 cents to $10.28 an ounce after tacking on 3.9% Tuesday.
December palladium rose 4.2% to stand at $218.35 an ounce, and January platinum gained 2.9% to $882.60 an ounce. Read related story.
Elsewhere in the commodity markets, oil futures fell more than 6%, pulling back after Tuesday's rally. See Futures Movers.
The Reuters/Jefferies CRB Index , a benchmark gauging the prices of major commodities, fell by 1.3% to 274.73 points.
