The Daily Nugget: Will Gold Price Hold For Election?

Yesterday the gold price presented an excellent moment for those looking to invest in gold – it fell to $1,672.75, a price not seen since the end of August.

This morning, however, it has recovered somewhat to around $1,685. Many analysts expect it to remain trading sideways for the rest of the day or until there are some tangible signs as to how the election will play out.

Those who invest in gold may be wary of a Romney win, particularly as he is expected to replace Bernanke which may result in easing ending earlier. Interest rates may also be increased, another issue for gold investment. However, as we said in our research last week a Republican president can still do great things for the gold price, particularly one who arrives in the midst of a money-printing bonanza.

Here in London, City workers were greeted with a fairly depressing headline courtesy of City AM "City facing jobs bloodbath." The paper has been given privileged; first look access at the CEBR figures which show City jobs are likely to bottom out in 2014 before seeing some limited growth in the following years. In 2013 the consultancy believes there will be as few as 237,000 jobs in the City – the lowest number of financial services roles since 1993.

In other news in the UK, retail sales fell last month on the back of weak consumer confidence. We suspect little will be said on this as policymakers have the Christmas rush coming up which will enable them to remind everyone how spending is doing just fine.

This morning, Service PMIs were released for France, Germany and Italy. As we said in yesterday’s latest gold news, little change was expected however both France and Germany have come in lower than predicted.

We suspect little attention will be paid to this, eyes will be focussed on another part of the eurozone today instead; Greece. A new austerity package was announced last week and as a result strikes have been going on this week – putting some uncertainty in the markets as to how sustainable the package is. European leaders are now talking about the need to "lock-down" an agreement on how to handle Greece’s finances by next week.

In the US the fiscal cliff has been pushed ever so slightly further away after the US pledged during yesterday’s G20 talks to avoid a sharp fiscal contraction. Fiscal tightening in the US, set to commence in January, is estimated by the IMF to account for around 4% of GDP, however following yesterday’s meeting finance ministers have ‘vowed’ to make sure the “pace of fiscal consolidation is appropriate to support recovery.”

Over in India Diwali season is finally putting smile on gold sellers’ faces, who are now reporting positive sales in gold. Dhanteras, a day seen as auspicious for buying gold, will fall on November 11th, an increase in sales of 40% is expected.

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