Gold slides on dollar bounce as early US poll results trickle in

[BENGALURU] Gold fell more than 1 per cent on Wednesday as the US dollar strengthened after early voting results showed a close contest between President Donald Trump and Democratic rival Joe Biden in the US presidential election, with the former leading in Florida.

Spot gold fell 0.8 per cent to US$1,893.93 per ounce by 2.54am GMT.

US gold futures fell 0.9 per cent to US$1,894.20.

"The market is losing confidence in a clear run to a Biden victory at the moment ... We have seen the Biden trade unwind and a big effect of that is that we have seen the dollar strengthen," said IG Markets analyst Kyle Rodda.

Mr Trump was narrowly leading Mr Biden in the vital battleground state of Florida, while other swing states that will help decide the election outcome remained up in the air.

Investors were initially limbering up for a Biden win, who was expected to inject the market with potentially large stimulus measures to help weather the economic fallout from the Covid-19 pandemic.

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"I think the odds of a clean sweep are diminishing, almost by the minute. That reduces the possibility, or the likelihood at least, of a large stimulus program being agreed to in the first days of a Biden administration," said Matt Sherwood, head of investment strategy at Perpetual in Sydney.

Gold has gained about 25 per cent so far this year on the back of unprecedented global stimulus amid the Covid-19 pandemic since bullion is considered an inflation hedge.

The US dollar was up 0.7 per cent against a basket of major currencies.

"Gold has faded ahead of resistance at US$1,912 and is suffering as it appears Trump will hold the key swing state of Florida," said Jeffrey Halley, senior market analyst at Oanda, predicting a "choppy US$1,890 to US$1,920 range" in the morning session.

Silver fell 2.4 per cent to US$23.59 per ounce. Platinum dropped 1.3 per cent to US$855.78 and palladium was down 1 per cent to US$2,260.05.

REUTERS