Gold is trading lower on Friday morning as a global selloff in technology stocks deepens, prompting some investors to liquidate the precious metal to cover losses in other asset classes. The spot price has fallen 0.79% to $4,055.55 per troy ounce, while silver has retreated 0.35% to $51.598 per ounce.

Despite the pullback, gold still holds a weekly gain of more than 4%.

A sharp decline in US technology stocks on Thursday extended into Asian markets on Friday, driven by expectations that a Democratic sweep of both chambers of Congress could lead to a shift in Artificial Intelligence (AI) regulation, after a significant number of voters expressed opposition to the construction of data centres.

The wave of selling boosted demand for US Treasury bonds as a safe-haven asset, pushing yields down to their lowest levels since early September. Oil, meanwhile, extended its recovery on Friday, although it remains on course to post a weekly loss of approximately 15%.

“The correction seen yesterday and during today’s Asian session appears to stem from broader risk aversion and profit-taking,” Ole Sloth Hansen, head of commodity strategy at Saxo Bank, told Bloomberg. “The recovery in oil prices — whose earlier decline had helped trigger the gold rally — has added to the pressure for a consolidation of gains,” he added.

Gold surged more than 3% on Wednesday following midterm election results, as investors bet that newly elected Democrats would seek to end the conflict with Iran, which has been pushing energy prices higher and fuelling inflation. Markets also wagered that a divided government would constrain President Donald Trump’s fiscal agenda, limiting further increases in spending and public debt.

Such a scenario could help contain inflation, giving the Federal Reserve (Fed) greater room to ease monetary policy — a potential tailwind for gold, which tends to benefit from a lower interest rate environment.

“In the very near term, the trajectory of US equities and, above all, President Trump’s next moves regarding Iran remain the key factors to watch,” Hansen added.

Investors will also be monitoring US employment data due on Friday, as well as the Consumer Price Index (CPI) scheduled for release next week, for further clues on the state of the economy and the direction of interest rates. Weekly jobless claims had come in below market estimates.