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Gold Slides Nearly 2% on October Jobs Report, Ahead of US Election

November 7, 2016 at 18:12 by Andrew Moran

One day before millions of Americans head to the ballot box, gold has tumbled nearly 2%. The yellow metal’s momentum came to a grinding halt after the FBI confirmed it would not indict Hillary Clinton. Gold prices also dipped as the greenback strengthened on a strong jobs report.

December gold futures fell $24.80, or 1.90%, to $1,279.70 per ounce at 16:45 GMT on Monday. Gold had climbed 2.2% last week on growing uncertainty in the US election and across-the-board declines in domestic stocks. Gold prices edged above $1,300 to start off the first week of trading in November.

Silver also failed to continue its rally. December silver futures dropped $0.31, or 1.72%, to $18.05 an ounce. Silver gained a whopping 3.2% last week.

It seems, however, the election jitters have come to an end.

James Comey, director of the FBI, reiterated his previous stance that no criminal charges would be made against Clinton over her handling of confidential and classified emails. This made Republican nominee Donald Trump‘s chances of an Election Day upset slim. The latest polls suggest that Clinton will win on Tuesday.

Meanwhile, a strong October US jobs report provided the Federal Reserve with greater ammunition to raise interest rates next month. According to the Bureau of Labor Statistics (BLS), the national economy added 161,000 jobs last month, which was lower than 175,000 economists had expected. Despite the lower-than-expected figures, the Federal Open Market Committee (FOMC) is still ready to pull the trigger on a December rate hike.

At last week’s November FOMC meeting, policymakers iterated that they do not need any more data to proceed with its first rate hike since December 2015.

With the positive economic news, the US dollar strengthened against a basket of other currencies.

Gold is sensitive to a rising-rate climate and a stronger dollar. When rates go up, the opportunity cost is lowered because gold does not provide investors with any yield. When the greenback surges, it makes dollar-denominated commodities, like gold and silver, more expensive for foreign investors.

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