gold prices pared gains wednesday as u.s. stock markets recovered from an overnight tumble and investors digested what a donald trump presidency will mean for markets. gold for december delivery settled down 0.1% at $1,273.50 a troy ounce on the comex division of the new york mercantile exchange, after trading as high as $1,307.50 a troy ounce earlier in the session. rising stocks weighed on gold prices, as risk appetite gradually returned to the market. the s&p 500 was recently up 0.9% and the dow jones industrial average was up 1.2%. gold <u+201c>is competing against a stock market that is exceptionally strong,<u+201d> said ira epstein, a strategist with the linn group. <u+201c>it<u+2019>s holding on actually quite well<u+201d> given the recovery. a stronger u.s. dollar also hurt gold prices wednesday. the wsj dollar index, which weighs the dollar against a basket of other currencies, was up 0.7% at 88.66. a stronger u.s. currency is bearish for gold, since the dollar-denominated metal becomes more expensive for foreign buyers. the precious metal surged as much as 5% as election results rolled in and started to favor a trump victory. although gold gave back all of its immediate gains, many analysts believe mr. trump<u+2019>s win will be good for gold prices going forward. <u+201c>trump being elected creates nothing but muddy waters. the unknown continues to persist here,<u+201d> said peter hug, global trading director at kitco metals. the election could also influence the outlook for a december rate increase, traders said. ahead of the election, traders largely expected the federal reserve to raise interest rates in december, bolstered by stable economic data and comments from central bank officials. however, the economic and political uncertainty following tuesday<u+2019>s vote could derail plans for a rate increase. <u+201c>the focus is going to go back to the fed, but now even more so,<u+201d> said bob haberkorn, senior market strategist at rjo futures. <u+201c>this might give the fed a reason not to raise in december.<u+201d> higher rates tend to be bearish for gold, since the metal pays its holders nothing and struggles to compete with yield-bearing assets when borrowing costs rise. for many traders, the volatility was reminiscent of the surprise british vote to leave the european union. on june 24, following the brexit vote, gold prices jumped more than 6% in a single day on safe haven demand. however, david govett, head of precious metals at marex spectron, said this time, traders were ready, he said, with offices well staffed overnight. <u+201c>there<u+2019>s a general sort of feeling that people were more prepared this time,<u+201d> he said. write to stephanie yang at stephanie.yang@wsj.com and katherine dunn at katherine.dunn@wsj.com
gold reverses gains from trump victory as stocks recover - wsj
stephanie yang katherine dunn