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Gold Hits Session Highs As FBI Reopens Clinton Email Investigation

By Neils Christensen of Kitco News
Friday October 28, 2016 13:41

(Kitco News) - Gold prices are seeing positive gains Friday ahead of the Comex settlement following the breaking news that the FBI is reopening its investigation into Democrat presidential candidate Hillary Clinton’s email issues.

The news caused U.S. equity markets to fall into negative territory and have boosted gold futures to session highs. December gold futures last traded at $1,280.50 an ounce, up 0.87% on the day.

"In connection with an unrelated case, the FBI has learned of the existence of emails that appear to be pertinent to the investigation. I am writing to inform you that the investigative team briefed me on this yesterday, and I agreed that the FBI should take appropriate investigative steps designed to allow investigators to review these emails to determine whether they contain classified information, as well as to assess their importance to our investigation,” FBI Director James Comey wrote in a Friday letter.

"Although the FBI cannot yet assess whether or not this material may be significant, and I cannot predict how long it will take us to complete this additional work, I believe it is important to update your Committees about our efforts in light of my previous testimony,” he added.

Analysts note that the U.S. election on Nov. 8 has the biggest potential to destabilize financial markets. Markets have been pricing in a Clinton victory, which has reduced gold’s appeal as a safe-haven asset.

However, if Republican candidate Donald Trump can gain some momentum in the final week on the FBI’s new investigation, it could tip the scales.

“There are a lot of jitters out there, and I think you are seeing some short-sellers take their positions off the table ahead of the weekend,” said George Gero, managing director at RBC Wealth Management.

"“It’s too early to make a clear determination, but this development on Hillary Clinton’s emails has the potential to be a game-changer in the election. And if that is indeed the case, markets volatility could be higher in the near term. The precious metals markets are seeing a bullish initial reaction, while the U.S. dollar index is getting hit and is trading at its daily low. Come Monday morning, markets will have a better read on this matter," said Jim Wyckoff, senior technical analyst at Kitco Metals.

Thursday in their third-quarter gold survey report, analysts at Thomson Reuters GFMS warned that gold prices could push above $1,400 an ounce if it appears that Trump could win the election.

“On balance, a victory for Trump (or possibly even just a clear sign that this is set to happen) would be likely to cause gold to rise above $1,400 and even $1,500 for the first time since April 2013,” the analysts wrote in their report.