Gold eases to $3,922.16 after 2 percent rally as investors eye US midterm elections
Gold gave back part of Monday's gains on Tuesday, with spot metal down 0.62 percent at $3,922.16 an ounce by 5:32 GMT after climbing more than 2 percent to $3,954.41 in the previous session, a rebound from the one-year low struck on Friday. US December futures fell 0.97 percent to $3,930.95 an ounce, and the decline carried into UAE retail counters, where 24-carat gold eased AED5 to AED473 and 22-carat slipped AED4.5 to AED438.
The Monday rally had its own logic: oil prices dropped more than 7 percent, easing the fear that expensive energy would keep inflation and interest rates higher for longer. That relief is now being tested. Traders price a 74 percent probability of a December rate hike, according to CME's FedWatch tool, and higher rates raise the opportunity cost of holding metal that pays no yield. Gold lost 6.8 percent in October and fell below the $4,000 mark on its way to that one-year low, pressured further by investors selling bullion to cover losses as AI-related stocks pulled back.
Tuesday added another drag, with Asian technology shares extending a sell-off in US chipmakers. Against that, technical indicators showed gold's relative strength entering oversold territory last week, and ANZ reported physical demand offering support, particularly from Chinese households buying more after the price decline. Silver fell 1.8 percent to $49.71 an ounce, platinum slipped 0.2 percent to $1,446.80 and palladium lost 1.4 percent to $953.64.
Two events sit over the market. Tehran said on Monday that contacts with the United States aimed at ending their eight-month war were continuing, after talks with Qatari mediators produced revised proposals but no breakthrough; renewed fighting would reverse the diplomatic optimism. And the US midterm elections could move sentiment in Wednesday's Asian session, with investors watching whether a changed political landscape refocuses attention on US inflation and widening fiscal deficits, the kind of uncertainty that tends to send buyers back to gold.
