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Gold Drops After US Presidential Debate

September 27, 2016 at 17:29 by Andrew Moran

The financial markets gave Hillary Clinton the win following Monday night’s first US presidential debate. With a Clinton win in November, traders are betting that everything would remain the same in terms of foreign policy, trade, and the economy. This level of certainty is bad news for gold, which is trading in the red on Tuesday.

December gold futures fell $14.20, or 1.06%, to $1,329.90 per ounce at 16:59 GMT. Gold prices stayed flat on Monday as investors were waiting for the outcome of the US debate. The yellow metal has been unable to maintain any kind of momentum following last week’s announcement from the Federal Reserve to keep interest rates steady.

Silver also was unable to muster a rally on Tuesday. December silver futures tumbled $0.48, or 2.48%, to $19.11 an ounce. Silver had a strong week last week as it climbed 5%.

In addition to the Clinton debate victory, the US dollar is strengthening. A surging greenback makes gold more expensive to own for foreign investors, which then makes the yellow metal less attractive to hold.

Moreover, gold is being impacted by a couple of positive domestic economic data points.

Markit’s flash US services purchasing managers’ index printed at 51.9 this month, up from 51.0 in August. A reading that is higher than 50 suggests expansion in the industry. US consumer confidence also reached a new nine-year high in September. The Conference Board’s consumer confidence index rose to 104.1 this month, up from 101.8 last month.

Over the next several weeks, there will be two crucial reports coming out: September employment numbers and the third quarter gross domestic product (GDP). The current third quarter estimate by the Bureau of Economic Analysis (BEA) is a mediocre 2.9% expansion.

These two reports will not just be important for the market, but it could also impact the US presidential campaign. Anything positive would be a point for the Democratic nominee, while negative figures would help Republican nominee Donald Trump.

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