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(Kitco News) - The weaker trade for gold prices, which fell under $1,700 an ounce on Friday, could continue into early next week, but the outcome of the U.S. presidential election could alter activity for the rest of the week, market watchers said.

Prices were down on the day and the week. The most-active December gold contract on the Comex division of the Nymex settled at $1,675.20, down 2.1% on the week. December silver settled at $30.857 an ounce, down 3.7% on the week. 

In the Kitco News Gold Survey, out of 33 participants, 23 responded this week. Of those 23 participants, nine see prices up, while 11 see prices down, and three are neutral or see prices moving sideways. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

Gold prices were weaker ahead of U.S. jobs data Friday and extended those losses after the results were released, falling under technical-chart support at $1,700. Traders at the time said pre-placed sell orders under that level helped to advance the price break.

The U.S. Department of Labor said 171,000 jobs were created in October, and the August and September job-creation figures were revised higher. The unemployment rate rose by 0.1 percentage point to 7.9%. The data comes four days before the U.S. presidential election, but most market watchers and political analysts said in various news reports that the data is unlikely to greatly affect the outcome.

Hurricane Sandy didn’t affect the October data, according to the Labor Department. “Household survey data collection was completed before the storm, and establishment survey data collection rates were within normal ranges nationally and for the affected areas," it said.

George Gero, vice president with RBC Capital Markets Global Futures and a precious metals strategist, said he expects gold prices to fall next week, as “good news for the economy was bad news for gold prices.”

“Gold technically broke support. This is more than fearsome Friday after the better employment (report). Also, (there were) better factory orders figures. (It) all means the expected stimulus may be delayed,” he said.

Regarding Hurricane Sandy, which hit the East Coast with a vengeance on Monday after leaving a trail of death and destruction in the Caribbean, Gero said it could have a delayed impact on gold, suggesting that “this disaster may have impacted holiday outlook by (the) jewelry trade.”

Looking toward next week, news events may have a greater impact than economic releases. There will be a heavy news cycle next week, with the U.S. presidential elections on Tuesday, a Group of 20 meeting which starts over the weekend and lasts until Tuesday, central bank meetings from the Royal Bank of Australia on Tuesday, the Bank of England and the European Central Bank on Thursday, and finally China's leadership change.

There’s been debate in the markets on what the presidential outcome may mean for gold. The prevailing view is that a win for Democrat Barack Obama would mean higher gold prices on the idea of the status quo continuing, and win for Republican Mitt Romney would mean lower gold prices on thoughts that he might replace Federal Reserve Chairman Ben Bernanke.

“The way the market is trading, with the dollar up today and metals down, the market is pricing in a Romney win,” said Bob Haberkorn, senior commodities broker with RJO Futures.

Haberkorn added that he expects gold prices to be weaker next week, but to hold around $1,680.

No matter who wins on Tuesday, Bernanke’s term ends in 2014 and a recent New York Times article suggested that Bernanke may step down at that time anyway.

Once markets have digested the U.S. election news, Chinese politics will probably take center stage, Barclays analysts said. The 18th party congress starts on Thursday and is likely to run for a week. It will set new policy direction and elect new leaders for the next five to 10 years, they added.

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By Debbie Carlson of Kitco News dcarlson@kitco.com

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