Gold Prices Dip Despite Obama Election, ECB's Draghi

NEW YORK ( TheStreet) -- Gold prices were slightly lower Wednesday after President Barack Obama won re-election and Americans stuck to divided majorities in the bicameral Congress.

Gold for December delivery lost $3.20 to $1,711.80 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,733 and as low as $1,703 an ounce, while the spot price was losing $4.10, according to Kitco's gold index.

Gold hit 24-hour highs early Wednesday after Mitt Romney conceded the election, but gradually sank lower until European Central Bank President Mario Draghi said that the ECB's new bond-buying program would allow for unlimited interventions in government bond markets.

"But we have to understand how markets work. Our actions have to send a clear signal to markets that their fears about the euro area are baseless," Draghi said Wednesday in prepared remarks.

"Election now over and attention to basics and other problems like economic recovery will resume," George Gero, precious metals analyst at RBC Wealth Management, wrote in a note. "Good for gold as a continuing haven and a return to basics and Euro Zone problems after Draghi spoke brought new buyers to gold."

Silver prices for December delivery was slumping 32 cents to $31.71 an ounce, while the U.S. dollar index was gaining 0.17% to $80.77.

The gold price added more than $30 on Tuesday ahead of the U.S. elections, which, coupled with small gains on Monday, effectively reversed the severe Friday selloff that saw the yellow metal lose more than $40 an ounce.

Gold analysts who followed Tuesday's election late into the evening started to suggest an Obama victory, and offered predictions for what it could mean for gold moving forward.

" At this stage an Obama win combined with a clearly Republican controlled House of Representatives will be supportive for gold in the short thru long term. Obama has shown no serious intent to reign in runaway spending and attempt to close the deficit," said Jeffrey Wright, managing director at Global Hunter Securities. "Our national debt has significantly weakened the U.S. dollar and this is the key to higher gold going forward."

Obama's re-election also signaled to gold investors that Federal Reserve Chairman Ben Bernanke would not be replaced, which could likely mean a continuation of the central bank's open-ended, mortgage-backed securities purchasing program.

"The threat of Bernanke being replaced and a less-accommodative monetary policy being introduced is removed; assuming the Republicans retain control of the House, then the stalemate in Washington remains, and the threat of the 'fiscal cliff,'" said Adrian Day, president of Adrian Day Asset Management.

But Tim Harvey, senior vice president at ETF Securities U.S., was quick to point out that political events in the United States are not at the center of the gold market universe.

"The U.S. is very important to the gold market, however the gold market is dominated by the Indians and Chinese, so actually the U.S. election is a gold story, but not necessary the whole story," said Harvey.

Gold mining stocks were mixed Wednesday. Shares of Randgold Resources ( GOLD) were shedding 6.6%, as shares of NovaGold Resources were slumping 2.9%.

Among mining stock volume leaders, Kinross Gold ( KGC) was effectively flat, but Barrick Gold ( ABX) was up 0.39%.

Gold ETF SPDR Gold Trust ( GLD) was down 0.11%.

-- Written by Joe Deaux in New York.

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