Gold is narrowly confined as Hurricane Sandy bears down on the Eastern seaboard. Price discovery in the gold market largely occurs in the paper market. The NYSE and the COMEX floors are closed today, although electronic trading is taking place. Nonetheless, the storm is expected to keep volumes pretty light for the next couple days. The fast-approaching US election may be sapping volume as well.

However, late last week the London Bullion Market Association (LBMA) reported a sharp rise in daily clearing volume in the month of September, citing "the continued economic uncertainty in the Eurozone and US, the end of the holiday period and the start of the Indian festival season." This demand resulted in solid price gains through the end of Q3, but the inability of the market to push through the $1800 barrier amid mounting global growth risks netted a corrective/consolidative tone in October. Setbacks in the price of gold have been attracting good buying interest in the physical gold market; both from investors and from sovereigns.

As for the elections implications for gold: America's debt burden is likely to continue growing no matter whom wins election next week. While their may be some differences in the pace of that accumulation, that is more a function of Congress than the who sits in the Oval Office. By most accounts, the Republican party will maintain control of the House and odds seem to favor that Democrats will hold control of the Senate. In other words, where real differences can be made, the status quo is likely to prevail.