Gold prices were buoyed this morning in part by moderate weakness in the U.S. dollar

The gold price advanced modestly on Wednesday alongside other commodities as U.S. financial markets reopened following two days of closures due to Hurricane Sandy.  The spot price of gold rose as much as $12.21, or 0.7%, to $1,722.47 per ounce after consolidating near $1,710 earlier this week in electronic trading.  Gold prices were buoyed this morning in part by moderate weakness in the U.S. dollar, which fell 0.4% against a basket of foreign currencies.

Looking ahead to the remainder of the week, many market strategists expect trading volumes to be light as many individuals in the financial world remain unable to commute to their offices in New York City due to the subway system remaining closed.  City officials have yet to say when the subway system may reopen, but it is unlikely to be before Friday.

Despite the substantial damage caused by Hurricane Sandy, the U.S. Labor Department affirmed that it will release the highly-anticipated October non-farm payrolls report on Friday.  The closely-followed employment data is likely to serve as a key catalyst for both the gold price and the broader financial markets.

Nevertheless, Mitsui Precious Metals analyst David Jollie wrote in a note to clients today that he sees the price of gold remaining range-bound in the near term due to uncertainty ahead of next week’s U.S. presidential election.  “People are not keen to add risk to their portfolios ahead of that,” Jollie contended.

Analysts at UBS noted in their latest market report that the recent stabilization in gold prices above $1,700 per ounce ounce has been a constructive development ahead of a resumption of the yellow metal’s rally that occurred between June and September.  However, UBS cautioned that “There are those who are still looking for another dip, perhaps one that offers an opportunity to jump in sub-$1700, between now and year-end…The clear downtrend from earlier in the month has now been replaced by this consolidation phase. But the possibility of another attempt on the downside certainly cannot be ruled out, especially with U.S. nonfarm payrolls coming up and the U.S. elections looming.”

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