Spot gold rises 0.6% to $3,900.05 an ounce after sharp drop
Key Facts
Spot gold rose 0.6% to $3,900.05 an ounce at 20:01 U.S. Eastern time on Monday, while U.S. futures gained 0.2% to $3,908.30, according to an Investing.com report. The move followed a session in which the metal fell 3.7%, taking prices to their lowest level in a year. The decline brought in buyers the report described as bargain hunters, helping gold recover some of its losses. But the limited gains did not erase the impact of the earlier sell-off. October was gold’s worst month since 2008, the report said.
Gold moved as oil prices fell for a second consecutive session, ahead of the U.S. midterm elections scheduled for Tuesday, November 3. U.S. Secretary of State Marco Rubio said President Donald Trump preferred a diplomatic solution to the conflict with Iran. The prospect of a deal eased some concerns about additional energy-related inflationary pressures. The report said the decline in oil offered some relief to energy markets after the war stoked fears of continued price increases. Gold was therefore supported by a retreat in some inflation concerns, rather than a return of physical demand.
Diplomatic efforts continued alongside persistent risks of military escalation. Reuters reported that Iranian and Qatari officials held a third consecutive day of talks on November 2, seeking an agreement to end the U.S.-Israeli war on Iran. Iranian Foreign Minister Abbas Araghchi said the purpose of the “ongoing and advanced” talks was to continue consultations with Qatari mediators. He added that Tehran was ready for “defense and diplomacy.” The remarks point to an ongoing negotiating track, while the outcome of the talks remains uncertain.
Despite the talks, the possibility of a wider confrontation remained a factor limiting clarity on the market outlook. An Investing.com report said Trump had repeatedly threatened to resume strikes on Iran after the midterm elections, while Tehran warned of a broader response. An analyst at KCM Trade said hopes for diplomatic progress, together with the absence of any tangible military escalation over the weekend, had taken “some immediate heat” out of oil prices. But the analyst said the market was watching for the possibility of escalating rhetoric on Iran after the elections. That could push Brent crude toward $120 a barrel, in the analyst’s view.
Oil markets recorded a sharp decline in trading cited by Reuters. Brent futures fell 1.40% to $111.84 a barrel at 00:11 GMT on November 2, while West Texas Intermediate crude dropped 1.50% to $102.56. This followed a decline of more than 1% in oil on Monday as Iranian-Qatari talks continued. The drop in crude kept the inflation channel central to investors’ focus on gold. Prices remained tied to developments in negotiations and the risk of escalation after the elections.
The pressures preceding the rebound were not limited to geopolitical developments or inflation expectations. A decline in technology stocks helped prompt investors to liquidate gold holdings to cover losses in other portfolios, the report said. This coincided with a broad fall in U.S. stocks on Friday, October 30. The Nasdaq Composite fell 2.9%, while the S&P 500 dropped 1.8%, its worst day since June, according to the Associated Press. The episode showed how liquidity pressure in portfolios can add to gold selling even as geopolitical uncertainty persists.
Gold and oil movements come amid U.S. monetary policy that continues to keep inflation among investors’ considerations. On October 28, the Federal Reserve kept its target interest rate range at 3.75–4%, saying inflation remained elevated and geopolitical developments were contributing to continued uncertainty. A previous Investing.com report said the decision passed by a 10-2 majority, despite higher-than-expected inflation readings. Chair Kevin Warsh said the committee would use incoming data to determine the course of monetary policy. Tuesday’s elections and the talks on Iran remain among the key near-term developments markets are watching, alongside upcoming economic data.