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Gold prices mostly steady in Asia as rates, politics and OPEC mix

Published 09/27/2016, 07:16 PM
Updated 09/27/2016, 07:18 PM
© Reuters.  Gold steady in Asia

Investing.com - Gold prices were mostly steady in early Asia on Wednesday as investors navigated a mix of U.S. interest rate and presidential election views, prospects for an OPEC output freeze and an upbeat U.S. survey on consumer confidence.

Gold for December delivery on the Comex division of the New York Mercantile Exchange inched up 0.01% to $1,330.55 a troy ounce.

Earlier, Federal Reserve Vice Chair Stanley Fischer said Tuesday that the U.S. economy has started to generate better wages, but they need to go higher.

"Finally incomes of working people began to rise faster than incomes of people higher up" on the income scale, Fischer said while answering questions at Howard University after a speech. The former IMF chief economist said his comments were general in nature and when asked about the possibility of a no-interest rate economy said: "I don't like it." But he said the point on rates was not about monetary policy in the U.S.

Also on the radar of the markets, OPEC members, led by Saudi Arabia and other big Middle East crude exporters, such as Iran and Iraq, will meet non-OPEC producer Russia at the International Energy Forum in Algeria on Wednesday at 14:00GMT (10:00AM ET).

Overnight, gold prices were lower during North America's session on Tuesday, extending overnight losses as markets declared Democrat Hillary Clinton as the winner of her first U.S. presidential debate with Republican Donald Trump.

Democrat nominee Hillary Clinton appeared to have edged out her Republican opponent Donald Trump in the first presidential debate, based on analysts' take on the market reaction.

Online betting companies shortened the odds on a Clinton win in the wake of the Monday night debate, leaving her as the clear favorite among bettors.

Traders are mostly expecting Democratic candidate Hillary Clinton to win the presidency and have not factored in the implications of a victory for Donald Trump. The idea of Trump in the White House is a worrying one for some investors who balk at his populist, unpredictable style.

Recent polls have shown a tightening race with just around six weeks to go until the November 8 election. The next presidential debate is scheduled for October 9, with the third and final clash set for October 19.

The precious metal has been well supported in recent days after the Federal Reserve held off on raising interest rates and scaled back the number of rate hikes it expects next year.

Gold is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.

The Fed has policy meetings scheduled in early November and mid-December. Economists believe policymakers would avoid a rate hike in November in part because the meeting falls just days before the U.S. presidential election.

Markets are currently pricing in an 8.3% chance of a rate hike at November's meeting, according to Investing.com's Fed Rate Monitor Tool.

Also of note, U.S. consumer confidence unexpectedly jumped in September to more than a nine-year high boosted optimism over the strength of the economy.

The Conference Board said its consumer confidence index increased to 104.1 this month from a reading of 101.8 in August, whose figure was revised from a previously reported 101.1. That was its highest level since August 2007. Analysts had expected the index to slip to 99.0 in September.

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