Gold hits record high, stocks edge lower amid US election worries
Wall Street stocks edge down
Gold hits fresh all-time high
Dollar index gains
US yields hit three-month highs
Updates with US market open, adds analyst comments in paragraphs 4 and 11
By Chibuike Oguh and Amanda Cooper
NEW YORK/LONDON, Oct 23 (Reuters) -Gold prices hit record highs on Wednesday, defying the dollar's rise, which kept pressure on the yen and the euro, while global stocks edged lower amid investors' reluctance to place major bets ahead of the U.S. election.
Investors are also rethinking how much the Federal Reserve might need to cut interest rates after the most recent U.S. economic data pointed to an economy that continues to expand and create jobs.
Markets are pricing a 92% chance of a 25-basis-point cut at the Fed's next meeting in November and another 25-bps cut by year end. A month ago, traders were pricing in as much as a full percentage point in cuts by January. The yield on benchmark U.S. 10-year notes US10YT=RR hit three-month highs and were last up 3.8 basis points to 4.244%.
"The yields rising are implying a pro-growth administration is potentially coming into power and there's some fear about deficit-spending," said Thomas Hayes, chairman at Great Hill Capital in New York.
On Wall Street, all three main indexes were trading lower, driven by losses in consumer discretionary, healthcare and technology stocks.
The Dow Jones Industrial Average .DJI fell 0.52% to 42,700.16, the S&P 500 .SPX fell 0.36% to 5,830.00 and the Nasdaq Composite .IXIC fell 0.56% to 18,469.35.
The MSCI All-World index .MIWD00000PUS was 0.41% lower on the day, echoing weakness in Europe, where the STOXX 600 .STOXX was down 0.06%.
"This week's stock-market price action suggests that the 50th record high for the S&P 500 could be a tough ask with the U.S. election so close," XTB research director Kathleen Brooks said.
The chances of Donald Trump beating Kamala Harris have recently edged higher on betting websites, though opinion polls show the race to the White House remains too tight to call.
The prospect of another Trump presidency has been in focus for investors, as his policies include tariffs and restrictions on undocumented immigration, among other measures, that are expected to push up inflation.
"There is an illusion that if Trump wins, you want to buy energy. Energy actually underperformed during the period from 2016 to 2020. What did outperform, and people should be buying on that basis, would be industrials like Boeing BA.N, smallcaps, and, believe it or not, emerging markets and China equities," Hayes added.
Gold XAU= has shrugged off the strength in the U.S. dollar and rallied to a new record high of $2,757.99 an ounce. Demand for safe-haven gold is partly driven by U.S.-election worries and geopolitical tensions in the Middle East and Europe.
Bullion, which has risen 33% this year, was last down 0.8% to $2,726.51 an ounce. U.S. gold futures GCc1 fell 0.1% to $2,741.50 an ounce.
The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.37% to 104.48.
Against the Japanese yen JPY=, the dollar strengthened 1.34% to 153.08. The euro EUR=EBS fell 0.2% to $1.0775, its lowest since early August.
Goldman Sachs said in a note on Tuesday the euro could fall by as much as 10% in a scenario under which a Trump presidency ushered in hefty tariffs and tax cuts.
Brent LCOc1 crude futures fell 1.14% to $75.17 a barrel. West Texas Intermediate crude CLc1 dropped 1.13% to $70.93.
World FX rates YTD http://tmsnrt.rs/2egbfVh
Reporting by Chibuike Oguh in New York and Amanda Cooper; Editing by Rod Nickel
To read Reuters Markets and Finance news, click on https://www.reuters.com/finance/markets For the state of play of Asian stock markets please click on: 0#.INDEXA
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