Gold slipped on Tuesday as selling across precious metals continued, giving back part of Monday's gain tied to Iran peace hopes. Traders now look to the U.S. midterm elections as the next possible catalyst.
Spot gold fell 0.7% to $3,920.44 an ounce at 00:55 ET on Tuesday, slipping below $3,950. U.S. gold futures declined 1% to $3,929.67, while silver dropped 2.8% to $49.2455 an ounce.
Bullion had climbed 1.9% on Monday after Iranian President Masoud Pezeshkian said his government had received greater authority from the country's supreme leader to pursue peace negotiations.
Iran talks pull oil lower
U.S. President Donald Trump also indicated progress in the discussions, and Brent crude fell more than 7% before oil prices stabilised on Tuesday. The nine-month U.S.-Iran conflict has driven energy prices higher and fuelled inflation, increasing pressure on central banks to raise interest rates.
Higher borrowing costs typically weigh on gold because it does not generate interest income. However, easing oil prices have temporarily reduced concerns about further monetary tightening.
October losses and a tech selloff
Gold fell 6.8% in October, breaking below the key $4,000 threshold toward the end of the month and reaching a one-year low. Last week's retreat in artificial intelligence-related stocks also hurt the metal, as investors liquidated bullion holdings to cover losses elsewhere.
Further weakness in Asian technology shares on Tuesday, following a deeper selloff in U.S. chipmakers, left gold vulnerable to additional selling.
Midterms and physical demand in focus
The U.S. midterm elections could provide another catalyst, with results potentially influencing gold prices during Wednesday's Asian session. Investors are assessing whether a shift in the political landscape could refocus attention on U.S. inflation and fiscal deficits, potentially restoring bullion's appeal as a hedge against economic and geopolitical uncertainty.
Technical indicators offered some support, with a measure of gold's relative strength moving into oversold territory last week, suggesting prices could be poised for a recovery. Physical demand has provided another source of support, according to ANZ, particularly from Chinese households that have stepped up purchases during the recent price decline.
Renewed fighting in the Middle East remains a risk, particularly as hopes for diplomatic progress could quickly reverse.
Source: Investing.com
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