Gold rose, as lower oil prices offered some respite from inflationary pressures and dip buyers were drawn by the metal’s slide Friday to the lowest in a year.
Bullion gained as much as 0.7% to near $3,900 an ounce, clawing back some losses after a 3.7% slump in the previous session that rounded off the worst October for the metal since 2008. Oil dropped ahead of Tuesday’s US midterm elections, with Secretary of State Marco Rubio saying that President Donald Trump would prefer a diplomatic resolution to the Iran war.
Still, bullion remains vulnerable to any escalation in fighting in the Middle East. Trump has repeatedly threatened to resume strikes on Iran after the midterms, while Tehran threatened wider retaliation and several Persian Gulf states expressed concerns that another attack could unleash an even more destructive war across the region.
A global rout in technology stocks is also adding pressure to precious metals. Recent selloffs have prompted investors to liquidate bullion to meet losses elsewhere, and stocks were set to fall again on Monday, tracking a rout on Wall Street fueled by concerns around the artificial intelligence trade.
Gold was finding some immediate support from long-term investors who see the current price as cheap, said Justin Lin, a strategist at Global X ETFs. “We are likely to see some dip buying in the Asian session today as investors, and possibly central banks, cautiously add to positions,” he said. “But gold is undoubtedly sitting at precarious levels.”