With one day left before the US election, opinion polls show Barack Obama and Mitt Romney are neck and neck.

“Obama is clearly ‘favored’ by the commodities markets,” says a note from Commerzbank, “mainly because of his support for Ben Bernanke and the ultra-expansionary monetary policy of the US Fed, [but] any ‘disappointment’ if Romney should come out on top is likely to be short-lived.”

“The financial markets might not like [an Obama win],” adds Steve Barrow, head of G10 research at Standard Bank. “The Dollar could go down…[but] we don’t expect any weakness to last—at least not against the Euro. For here there’s something of a gap opening up between the US’s economic performance and that of the Eurozone.”

Gold prices traded above $1680 an ounce Monday morning in London, having earlier fallen to a nine-week low, while stock markets edged lower and US Treasury bonds gained, with one day to go before the US presidential election. The US Dollar Index, which measures the Dollar’s strength against other major currencies, rose to a two-month high.

“Gold is still holding the long-term uptrend support at $1631,” says the latest technical analysis from bullion bank Scotiabank. “There is also support at $1661.”

Silver bullion rallied back to $31 an ounce, while on the commodities markets, oil was broadly flat while copper prices edged lower.

Gold remains more than 2% off where it started the month, while silver is down more than 4%, after both metals fell sharply on Friday following the release of better-than-expected US nonfarm payroll data.

In the US, the so-called speculative net long position of Comex gold futures and options traders – the difference between the numbers of bullish long and bearish short contracts held by traders classified as noncommercial – fell for the third week running in the week to last Tuesday, weekly figures published Friday by the Commodity Futures Trading Commission show.

“Given the excessive length of the past weeks and a rising uncertainty among investors over the ability of QE3 to support prices and/or the longevity of the Fed’s open-ended commitment to easing, the liquidations [of long positions] are unsurprising,” says Standard Bank commodities strategist Marc Ground. “The market is considerably less strained than it was several weeks ago — net speculative length as a percentage of open interest has come off considerably…which could see some consolidation emerge.”

Bullion dealers in Asia meantime “are not in a rush to buy because there is plenty of supply around,” one Singapore-based trader told newswire Reuters this morning. “But if prices drop below $1650, there will be good demand and supply will tighten up.”

This Sunday sees the festival of Dhanteras in India, followed by Diwali two days later, both traditionally associated with buying gold.

“The peak marriage season is immediately after Diwali,” says Mehul Choksi, chairman of Indian jewelry group Gitanjali. “We expect sales to grow by 35-40% this Dhanteras.”

“If gold remains at the current price level,” adds Kumar Jain at Mumbai jewelers Umedmal Tilokchand Zaveri, “jewelry sales will definitely surge as people are also buying for the marriage season.”

While in Europe, Greek prime minister Antonis Samaras has promised MPs that a fresh round of austerity measures would be “the final one”, ahead of a parliamentary vote on reforms this Wednesday. The result of the vote could influence whether or not Greece gets its next tranche of bailout money, worth €31 billion.

“The Greek risk could come to a head this week,” says Holger Schmieding, chief economist at Berenberg Bank. “Greece matters as a trigger of potential contagion to the much bigger economies of Italy and Spain.”

The number of unemployed in Spain rose by 128,200 last month, official figures published this morning show, considerable more than expected.

Some European sovereigns could potentially reduce their borrowing costs by issuing bonds collateralized with gold bullion, CNBC reports, citing Tilburg University economist Sylvester Eijffinger.

Eijffinger is the latest economist to back such an idea, which has been proposed by the World Gold Council and which the subject of a draft paper published by the European Parliament in September.