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Gold rises as investors weigh fallout of US midterm verdict

November 08, 2018 00:00:00

BENGALURU, Nov 07 (Reuters): Gold came off a one-week low to trade higher on Wednesday as investors sought cover from market volatility and uncertainty surrounding the fallout of US midterm elections results.

The Democratic Party is expected to win control of the US House of Representatives, with the Republicans seen keeping their majority in the Senate.

A split Congress may hurt the dollar temporarily: a Democratic win in one or both chambers is likely to be seen as a repudiation of President Donald Trump and the policies which have boosted corporate growth.

"Until the (final) results come out, markets will be very choppy," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong. "In the short- and medium-term, gold will be bullish from here."

Spot gold was up 0.3 per cent at $1,229.58 per ounce, as of 0439 GMT, having touched a one-week low of $1,222.90 earlier in the session. US gold futures were up 0.4 per cent at $1,231.1 per ounce.

Wall Street stock futures and Asian shares erased most of their earlier gains in choppy trade as the election results trickled in.

Meanwhile, the dollar index, which measures the greenback against a basket of six major currencies, was down about 0.4 per cent, making the bullion less expensive for holders of other currencies.

Investors also awaited a two-day meeting of the Federal Reserve starting later in the day to gauge the outlook for US monetary policy.

Fed policymakers are not expected to raise key rates, but traders are waiting to see whether they offer clues about possible rate increases in December and in 2019, analysts said.

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