Gold recovered above $3,900 an ounce on Monday as bargain hunters returned after the metal's steepest monthly decline since 2008. Geopolitical uncertainty, technology-stock volatility and elevated yields still cloud the outlook.
Gold rebounded above $3,900 an ounce on Monday as bargain hunters returned, helped by a weaker U.S. dollar. The move followed the metal's steepest monthly decline since 2008.
At 04:09 ET, spot gold rose 0.7% to $3,902.81 an ounce, while U.S. gold futures gained 0.3% to $3,911.77. The U.S. dollar Index declined 0.4% to 101.45.
Gold recovers from a one-year low
Gold plunged 3.7% in the previous session, which pushed prices to a one-year low and capped the metal's worst October performance since 2008. Bullion then gained as much as 0.7% to approach $3,900 an ounce as investors took advantage of lower prices.
Gold also remains vulnerable to broader equity-market liquidations. Recent declines in technology shares have prompted investors to sell bullion to cover losses elsewhere in their portfolios, and U.S. stocks were poised to extend their declines on Monday.
Iran risks stay in focus
Oil prices declined for a second consecutive session ahead of Tuesday's U.S. midterm elections. Secretary of State Marco Rubio said President Donald Trump preferred a diplomatic resolution to the conflict with Iran, raising hopes of a settlement and easing concerns about further energy supply disruptions and inflationary pressures.
However, the threat of renewed military escalation remains. Trump has repeatedly warned that Washington could resume strikes against Iran after the midterm elections, while Tehran has threatened a broader retaliatory response.
ANZ expects consolidation near $4,000
ANZ analysts said elevated yields were becoming increasingly difficult for bullion to overcome, while resilient U.S. consumption, running at an annualised 3.8%, pointed to continued economic strength.
Nevertheless, investor demand has remained resilient despite higher interest rates. ANZ said gold-backed exchange-traded funds attracted more than 50 tonnes in September even as U.S. Treasury yields exceeded 5%.
ANZ expects higher yields and a stronger dollar to limit further gains in the near term, leaving gold vulnerable to consolidation around $4,000 an ounce and potentially trading below that level before a more sustained recovery emerges.
Source: Investing.com
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