Gold is declining on Tuesday morning, 3 November, against a backdrop of recovering oil prices and uncertainty surrounding the United States midterm elections taking place today.

The precious metal is down 0.96%, trading at $3,908.52 per ounce, while silver is posting a sharper fall of 3.13%, to $49.051 per ounce.

The rebound in oil prices follows reports from the international press indicating that Iran and the United States remain far from reaching an agreement, even as lower-scale US military strikes against the Islamic Republic continue.

On Monday, a sharp drop in oil prices had benefited gold — an asset that generates no yield and whose appeal tends to rise when expectations of interest rate increases diminish.

“The relief proved short-lived, as the decline in oil prices did not hold,” Christopher Wong, an analyst at Oversea-Chinese Banking Corp, told Bloomberg. “We remain cautious in the near term and do not rule out another phase of consolidation or additional downside pressure as markets search for a floor in prices,” he added.

The war in the Middle East, now entering its ninth month, has driven a significant rise in energy prices, fuelling inflationary pressures and prompting central banks to adopt more restrictive monetary policies.

Gold has also been affected by investors withdrawing from stocks linked to artificial intelligence (AI), with some selling positions in the precious metal to offset losses in other assets. In October, the gold price fell 6.8%, retreating below $4,000 per ounce.

Meanwhile, Americans are heading to the polls on Tuesday for the midterm elections. According to wealth manager Noah Holdings, cited by Bloomberg, the key factor to watch will be how the results could influence US fiscal policy and, consequently, the trajectory of gold prices.

The precious metal is particularly sensitive to the actions of the US Treasury in the bond market, the government’s reliance on short-term debt financing, and the Federal Reserve’s capacity to control short-term interest rates. Any shift in these conditions arising from the election results could have indirect repercussions on the gold price.

Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/?p=557640