UPDATE: Gold prices end higher ahead of U.S. Senate elections in Georgia
By Myra P. Saefong and Mark DeCambre
Gold prices finished Tuesday trade sharply higher, with uncertainty surrounding the U.S. Senate runoff elections in Georgia offering support for the haven metal.
A climb in the U.S. ISM manufacturing index to its highest since August 2018, in data published Tuesday, relieved fears about the economic recovery from the pandemic, and along with strength in the domestic stock market, produced some headwinds for gold earlier in the session.
However, gold found support from uncertainty about Tuesday's "runoff elections in Georgia more than anywhere else," Jeff Wright, executive vice president of GoldMining Inc., told MarketWatch.
If Democrats win both seats in the Georgia runoff contests, that could make it easier for President-elect Joe Biden's administration to pass legislation that could influence trading in stocks, including the repeal of corporate tax cuts put in place under the Trump administration.
The fear is Democrats could "control both houses of Congress," and "push through radical tax policy, run away spending, and alter any semblance of divided government," Wright wrote.
Read: Why you may have to wait past Tuesday for the Georgia election results (https://www.marketwatch.com/story/why-you-may-have-to-wait-past-tuesday-for-the-georgia-election-results-11609789100)
The result of the Senate runoff elections in Georgia will have "massive implications for the country over the coming years," wrote Craig Erlam, senior market analyst at Oanda, in a daily research note.
"The Republicans only need one seat to retain their majority with a double Democrat victory giving them a de facto majority, given the casting vote of the vice President [Kamala Harris]," he said.
In Tuesday dealings, gold for February delivery rose $7.80, or 0.4%, to settle at $1,954.40 an ounce, following a 2.7% gain on Monday that took bullion to its highest level since early November, according to FactSet data.
Silver futures for March delivery SIH1 (#phrase-company?ref=COMPANY%7CSIH1;onlineSignificance=prominent) SI00 (#phrase-company?ref=COMPANY%7CSI00;onlineSignificance=prominent), meanwhile, rose 27.6 cents, or 1%, to settle at $27.640, following a 3.6% gain for gold's sister metal to start 2021.
Wright said he's "looking for gold to return to $2,000 in the coming weeks after the Biden administration takes over. "
Meanwhile, renewed implementation of lockdown measures in the U.K, EU and U.S. in particular to limit the spread of the coronavirus caused some consternation on Wall Street and, perhaps, bolstered appetite for bullion.
See: January will be worst month for U.S. pandemic so far with postholiday travel cases seen surging (https://www.marketwatch.com/story/january-will-be-worst-month-for-us-pandemic-so-far-as-post-holiday-travel-cases-seen-surging-2021-01-05?mod=mw_latestnews)
The highly transmissible strain of COVID-19 (https://www.wsj.com/articles/highly-contagious-covid-19-strain-has-been-found-in-new-york-state-gov-cuomo-says-11609795489?mod=article_inline)recently discovered in the U.K. has also been found in New York, the state's governor said Monday, and London announced a stricter national lockdown, even as vaccines are being rolled out in many parts of the world.
But U.S. data released Tuesday morning revealed that the ISM manufacturing index climbed (https://www.marketwatch.com/story/u-s-manufacturers-grow-faster-in-december-despite-coronavirus-surge-ism-finds-11609859979?mod=mw_latestnews) to 60.7% in December, from 57.5%, to reach its highest level since August 2018, dulling appetite for gold and prompting some losses in earlier dealings. U.S. benchmark stock indexes also traded broadly higher (https://www.marketwatch.com/story/dow-futures-slide-lower-tuesday-morning-after-stocks-first-decline-to-start-a-year-since-2016-11609850205), a day after their first losses to open a new year since 2016.
A soft start for U.S. dollar, after its steepest annual slide since 2017 (https://www.marketwatch.com/story/dollar-suffers-first-annual-drop-since-2017-11609456986), also was helping to buttress gold and silver prices. The ICE U.S. Dollar Index was off 0.5% on Tuesday at around 89.466, hanging around its lowest level since the spring of 2018. A weaker dollar can make gold more attractive to overseas buyers.
Rounding out metals action on Comex, March copper tacked on 8.5 cents, or 2.4%, to end at $3.6395 a pound.
April platinum added $48.10, or 4.5%, to settle at $1,119.60 an ounce and March palladium finished at $2,493.40 an ounce, up $102.20, or 4.3%.
-Myra P. Saefong; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
January 05, 2021 14:21 ET (19:21 GMT)
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