Goldman says Clinton victory more likely as gold holds decline

[SINGAPORE] Gold held the steepest slump in a month as Americans prepare to cast their ballots in the US presidential election after a rancorous and divisive campaign, with Goldman Sachs Group Inc saying that Democrat Hillary Clinton is more likely to win the White House than Donald Trump.

Bullion for immediate delivery traded at US$1,284.27 an ounce at 3:02pm in Singapore from US$1,281.64, according to Bloomberg generic pricing. On Monday, prices sank 1.8 per cent, the most since Oct 4, on speculation that the odds of a victory for Mrs Clinton have improved, hurting haven demand.

"Our economists believe that there is a significant polling deficit for Mr Trump to overcome in a large number of states, particularly in contrast to Secretary Clinton," Goldman analysts including Max Layton said in a report on gold received on Tuesday.

The Democrat "simply needs to win one of the very competitive states she currently leads - Colorado, Nevada, or North Carolina - and maintain her sizable lead in the others to win."

Bullion has swung in recent weeks as investors tracked the US campaign, with developments favouring Mr Trump buoying demand for havens, even as the Federal Reserve is seen moving closer to the first rate rise of 2016.

The precious metal slid on Monday after the Federal Bureau of Investigation absolved Mrs Clinton of committing a crime in her handling of e-mails, sending the US dollar higher.

Goldman Sachs stuck with its three and six-month outlooks for US$1,280 an ounce, and forecast prices dropping to US$1,250 in 12 months.

"In recent days, gold prices have been increasingly positively correlated with the implied odds of a Trump victory," Mr Layton wrote, saying that the digital gold options market looks like a relatively cheap way to be long on a Trump victory.

"Having said this, our economists continue to believe that Sec Clinton victory is more likely."

Early Votes

The final Bloomberg Politics national poll before Tuesday's election has put the Democratic candidate ahead of Mr Trump by three percentage points. More than a third of likely voters, 37 per cent, say they've already voted, and Mrs Clinton is leading Mr Trump with that group, 46 per cent to 38 per cent.

Gold futures may fall to US$1,250 within a week should Mrs Clinton prevail, while a victory for Mr Trump could buoy bullion to US$1,395, according to more than 20 analysts and traders surveyed by Bloomberg.

Election jitters have jump-started volatility in bullion, with a gauge of price swings over the past 15 days rebounding from a two-year low.

Bullion of 99.99 per cent purity dropped as much as 0.5 per cent to 280.1 yuan a gramme (S$57.49 a gramme) on the Shanghai Gold Exchange.

On global markets, spot silver rose one per cent after losing 1.3 per cent on Monday. Platinum added 0.8 per cent, while palladium fell 0.2 per cent.

BLOOMBERG