Gold held gains above $4,100 an ounce as inflation concerns eased alongside lower oil prices. Bullion traded near $4,130, rising 1.7% on Monday and 5% last week. Brent crude slumped to near $92 a barrel on expectations of a breakthrough in US-Iran peace negotiations following the Democratic sweep in last week's midterm elections.
Oil and gold have mostly moved in opposite directions this year, with elevated energy prices fueling inflation and tighter monetary policy, a headwind for the non-yielding metal. Demand was also boosted by a drop in the US dollar, making the commodity cheaper for international buyers. Still, headwinds remain, with Federal Reserve officials expressing the need to tame inflation and traders pricing in a high likelihood for a December interest rate hike.
Richmond Fed President Tom Barkin and Chicago Fed President Austan Goolsbee pointed to a strong economy and inflationary pressures. While the consensus is "moderately bullish to sideways" heading into year-end, conviction is low as major allocators sit on the sidelines until January, leaving short-term moves to trend-following trades and physical demand. Spot gold was 0.3% lower at $4,127.80 as of 8:27 a.m. Singapore time.
Silver fell 0.3% to $53.30 after earlier gains. Platinum and palladium also edged lower. The Bloomberg Dollar Spot Index was marginally higher after dropping 0.5% on Monday.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing