Gold Climbs as Vote Jitters Hit U.S. Stock Futures, Mexican Peso
Polls point to a close race ahead of presidential election
Bullion, yen boosted by haven demand as dollar extends slide
Investors are becoming more jittery amid a tightening race for the U.S. presidency, sending gold higher for a sixth day while weighing on equities and the Mexican peso.
Bullion climbed to a one-month high, U.S. equity index futures fell and Asia ex-Japan stocks held near their lowest level since September after Fox News reported that a Federal Bureau of Investigation probe involving Democratic nominee Hillary Clinton was intensifying. The peso slid versus all of its major peers on concern Mexican exports will suffer if she loses. Bloomberg’s dollar index dropped for a fifth day amid speculation the election’s fallout could kill off any prospect of the Federal Reserve raising interest rates next month.
Investors turned more risk averse over the past week as voter surveys suggested Clinton’s once dominant lead over Donald Trump was faltering ahead of the Nov. 8 election. Poll aggregator FiveThirtyEight gives her a 68 percent chance of victory, 14 percentage points less than it estimated prior to a Friday announcement that the FBI had reopened a probe into her use of an unauthorized e-mail server while Secretary of State. Bets on a December interest-rate hike by the Fed were stepped up on Wednesday at the central bank left policy unchanged and signaled a December move was likely.
“U.S. political uncertainty ahead of next week’s election is weighing on markets,” said Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia in Sydney. “Most polls suggest the presidential election is turning out to be a closer call now compared to a few days ago following the controversy about Hillary Clinton’s e-mail investigation. In the short term, this should weigh on the dollar particularly versus the yen and euro.”
The FBI’s investigation into Clinton has taken on a very high priority, Fox News reported, citing unidentified sources. She led Trump 39 percent to 35 percent among independents surveyed Friday through Monday, the latest Purple Slice online poll for Bloomberg Politics showed.
Gold climbed 0.4 percent to more than $1,300 an ounce as of 1:44 p.m. Hong Kong time, extending its longest winning streak since September.
“Gold was stronger on the back of safe-haven buying as opinion polls on the U.S. election continued to show Trump gaining,” Australia & New Zealand Banking Group Ltd. said in a note. “Weak equity markets also helped improve investor appetite.”
Copper declined 0.3 percent in London and aluminum extended Wednesday’s retreat from its highest level since June 2015.
Crude oil advanced 1 percent to $45.78 a barrel. It tumbled 2.9 percent in the last session as data showed U.S. inventories rose by 14.4 million barrels last week, the biggest gain in data going back to 1982 and more than the 2 million barrel increase forecast in a Bloomberg survey. Record OPEC output last month is also damping the outlook for oil, complicating the group’s effort to stabilize prices.
Futures on the S&P 500 Index fell 0.2 percent following a seventh day of losses in the U.S. benchmark, its longest selloff since November 2011. Nasdaq 100 Index contracts declined 0.4 percent after Facebook Inc. slid in extended New York trading after reporting earnings. The social network predicted an uptick in costs and a slowdown in advertising sales growth.
About five shares declined for every four that rose on the MSCI Asia Pacific excluding Japan Index, which was little changed after sliding 1.4 percent in the last session. New Zealand’s benchmark stock gauge entered a correction, while Hong Kong’s Hang Seng Index held near its lowest level since August. Japanese markets were shut for a holiday.
“The move to take risk off the table continues,” Chris Weston, chief market strategist in Melbourne at IG Ltd., said in an e-mail to clients. “We have reached a point where there is a buyers strike, where money managers have reduced their risk, increased cash allocations within the portfolio and are happy to ride out this mini-storm of uncertainty. This is a perfect breeding ground for short sellers who love the combination of uncertainty and lack of bids.”
Wynn Macau Ltd. slumped more than 4 percent in Hong Kong after reporting a profit that trailed analysts’ estimates, while Hong Kong Exchanges & Clearing Ltd. retreated after posting a 34 percent drop in earnings.
The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, fell 0.2 percent. The yen strengthened as much as 0.7 percent to a one-month high and South Korea’s won rebounded 0.9 percent from near to a three-month low. A JPMorgan Chase & Co. index of global currency volatility held at a seven-week high.
“The market’s concerned that the FBI investigation will swing next week’s election,” said Mansoor Mohi-uddin, a Singapore-based strategist at Royal Bank of Scotland Group Plc.
The Fed left rates on hold for a seventh consecutive meeting Wednesday and said in its statement it only needed “some” further evidence that inflation and employment were on track toward their goals before raising them. Futures contracts show a 78 percent likelihood of an increase in December, compared with 68 percent on Tuesday.
Mexico’s peso fell as much as 0.8 percent to its weakest level since September, reversing an earlier advance. The currency tends to fall when Trump’s prospects election prospects improve because he has pledged to revisit the North American Free Trade Agreement that governs commerce between the U.S. and Mexico.
The pound added 0.2 percent before the Bank of England announces the outcome of a monetary policy review and updates its inflation projections. A 17 percent tumble in the pound since Britain’s June vote to leave the European Union has stoked expectations that consumer-price gains will accelerate.
Australia’s 10-year bond yield fell four basis points to a one-week low of 2.30 percent. New Zealand’s declined by two basis points to 2.75 percent.