Gold holds near 1-month as Trump angst meets rate fears

London - Gold held near a one-month high as investors weighed the need for a haven before next week’s American presidential election against expectations of higher US interest rates.

The metal was little changed on Friday, after climbing the previous six days as the dollar weakened and opinion polls showed a dwindling lead for Hillary Clinton over Donald Trump.

Bullion is set for a third weekly gain, the longest run since early July, when investors sought a haven following the UK’s vote to leave the European Union.

Investors are seeking to navigate the crosscurrents thrown up by Tuesday’s vote - with a possible victory for Trump seen lifting gold to as high as $1 400 an ounce, Citigroup said. At the same time, traders are becoming more certain the Federal Reserve will raise interest rates next month as the economy improves.
 
Higher borrowing costs curb the appeal of owning assets that don’t provide a yield, such as gold.

"Election fears and a weaker dollar was what helped push gold back above $1 300 this week," Jens Pedersen, a Danske Bank A/S analyst in Copenhagen, said by phone.

"At the same time, the market is looking for a rate hike later this year, though we think the Fed will wait until March."

Gold for immediate delivery lost 0.1% to $1 301.76 an ounce by 10:51 in London, according to Bloomberg generic pricing. It’s up 2.1% this week, the most since September.

US jobs data later today may give more clues on the timing of interest-rate increases. Fed officials said this week they need only "some" further evidence that employment and inflation are on track toward their goals in order to hike, after leaving rates unchanged for the seventh consecutive meeting.

The odds of a rate increase next month have risen to 78% from 69% at the end of last week, Fed fund futures show.

In other precious metals:

Holdings in gold-backed exchange-traded funds rose 1.9 metric tonnes to 2 044.9 tonnes as of Thursday, data compiled by Bloomberg show.

Assets are heading for the first weekly gain in three. Silver prices were little changed at $18.348 an ounce, set for a weekly increase of 3.3%.

Platinum fell 0.3%, while palladium rose 0.2%.