Gold tops $1,300/oz as US dollar continues to fall

The spot gold price topped $1,300 per oz on Thursday November 3 during Asian trading hours with the US dollar continuing to weaken as markets stayed nervous ahead of US presidential election next Tuesday.

The spot gold price was recently quoted at $1,302.55/1,302.85 per oz, up $4.50 on the previous close. Trade has ranged from $1,296.40 to $1,303.30 so far.

The US dollar index came under pressure after recent polls showed Donald Trump gaining on Hillary Clinton. The index fell to a three-week low of 97.11 on Thursday – it was recently at 97.16, down 0.25%.

On Wednesday, the US Federal Open Market Committee (FOMC) left the Federal Funds rates unchanged which was in line with market expectations. The FOMC’s statement suggests that a December rate hike remained on the cards, with analysts seeing the Fed’s decision as still dependent on data and market developments including the aftermath of the US presidential election.

The Federal Reserve has effectively given the green light to a December rate hike, as long as no major disruptive event plays out between now and December 14, Chris Weston, a market analyst at IG, said.

But there is still a “mountain of uncertainty” which could derail the Fed’s thinking – this including a Donald Trump victory and/or if one of the presidential candidates disputes the validity of the election, he said.

“One suspects this election could take a bitter turn and the financial markets would not know where to look. In this environment, the probability of a December rate hike would fall from the current 78% being priced into the interest rate markets to closer to 20-30%,” Weston added.

In data, the China’s Caixin October services PMI came in at 52.4 on Thursday, close to forecast of 52.5 while edging up 0.4 from the previous month. This was also the fastest growth for business activity at services companies in four months.

The upbeat services PMI data comes after strong-than-expected Chinese manufacturing data earlier this week which suggested that Beijing’s stimulus measures are stabilising the Chinese economy amid the country’s transition to a more service-oriented economy.

In US data released Wednesday, the ADP October non-farm employment change – a precursor to the official jobs report on Friday – came in at 147,000, which was below forecast of 166,000.

The official numbers are expected to show some 174,000 new jobs being added in the US in October, up from 156,000 in September.

Other US data due later today includes unemployment claims, preliminary non-farm productivity, preliminary unit labour costs, final services PMI, ISM non-manufacturing PMI and factory orders.

In other commodities, the Brent crude oil spot price rose 0.55% to $47.43 per barrel and the Texas light sweet crude oil spot price increased 0.31% to $45.79 so far on Thursday.

In equites, the Shanghai Composite rose 0.35% to 3,113.48 recently on Thursday.

In the other precious metals, the spot silver price rose $0.067 to $18.585/18.61 per oz. Platinum at $990/996 per oz was up $3 and palladium climbed $2.50 to $626/633 per oz.

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