Gold prices fell on Tuesday after surging more than 2% in the previous session amid a sharp decline in oil prices that eased inflation concerns, as investors awaited the results of the US congressional midterm elections.
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Spot gold fell 0.5% to $3,926.52 per ounce by 03:53 GMT. Prices had risen more than 2% to $3,954.41 in the previous session after hitting a one-year low on Friday.
US gold futures for December delivery fell 0.8% to $3,936.30 per ounce.
Tim Waterer, chief market analyst at KCM Trade, said gold was “still in a stabilization phase” following last week’s sharp decline.
Waterer added that gold was still being sold as a highly liquid asset to cover losses and margin requirements elsewhere, rather than being purchased as a traditional safe haven. He said this characteristic was weighing on the metal under current market conditions.
Geopolitically, Tehran said negotiations with Washington aimed at ending the eight-month-old war were still ongoing, after several days of talks between Iran and Qatari mediators concluded with revised proposals but no tangible progress. Oil prices fell more than 7% on Monday.
Higher energy prices increase expectations that the US Federal Reserve will keep interest rates elevated for longer, raising the opportunity cost of holding non-yielding gold.
According to CME Group’s FedWatch tool, traders currently see a 74% probability that the Federal Reserve will raise interest rates in December.
Markets are now focused on the US midterm elections for indications about the outlook for fiscal policy and overall investor confidence.
Waterer said a Democratic victory would likely create a greater obstacle for the artificial intelligence data-center construction sector and the broader technology industry. He added that any additional pressure on technology stocks from increased regulatory scrutiny could spill over into gold as positions are reduced to cover losses in other sectors.
Among other precious metals, spot silver fell 1.8% to $49.71 per ounce, platinum declined 0.2% to $1,446.80, and palladium dropped 1.4% to $953.64.
Source: Reuters
