Trump gold price rally evaporates

On Monday gold began to lose sight of the $1,300 an ounce level with December futures trading on the Comex market in New York falling more than 1.5% compared to Friday's close to exchange hands at $1,284.10 an ounce in early morning dealings.

The gold price was hurt by a surge in the US dollar index to 97.75 as the currency regains lost ground following news that the FBI has closed an investigation without finding new evidence of wrongdoing in the ongoing Hillary Clinton private email server scandal. Last week when the new probe was first announced, Donald Trump gained sharply in polls and and the dollar came under pressure from the uncertainty surrounding the impact on financial markets should Trump triumph.

"It looks like the market is overwhelmingly pricing in a Clinton victory"

Conventional wisdom is that the gold price and the dollar move in opposite directions. The dollar's all-time peak of 164.7 was reached in February 1985. That coincided with a bottom in the price of gold of $284.25 an ounce. In August and September 2011, when gold was peaking above $1,900, the dollar index dipped below 75.

“It looks like the market is overwhelmingly pricing in a Clinton victory,” Vyanne Lai, an economist at National Australia Bank in Melbourne, told Bloomberg on Monday:

“The U.S. dollar has jumped, which in turn is weighing on gold prices. You can see there’s some sort of a relief rally in the equity market as well.”

Trump could add $200 an ounce

Last week HSBC Chief Precious Metals Analyst James Steel was quoted by Bloomberg as saying a Clinton win would be supportive of the gold price, but a Trump triumph could spark as much as a $200 an ounce jump in the price adding that the metal could "enjoy at least a 8 percent jump whoever wins the race":

Both candidates have espoused trade policies that could stimulate demand, with gold offering a potential "protection against protectionism," he says. Even the relatively more internationalist Democratic candidate has argued for the renegotiation of longstanding free-trade agreements. That's positive for gold — even if "not on the scale of Mr Trump’s agenda.

Year to date gold is managing gains of 21% or more than $220 an ounce, one of its best annual performances since 1980.