Gold rose as lower oil prices eased inflation pressures and dip buyers stepped in after the metal slid to its lowest level in a year on Friday. Bullion gained as much as 0.8% to near $3,900 an ounce, recovering some of the losses from a 3.7% slump in the previous session that capped the worst October for the metal since 2008.
Oil fell after Axios reported that President Donald Trump wants to give diplomacy more time before deciding whether to resume strikes on Iran following Tuesday's midterm elections. Bullion remains vulnerable, however, to any escalation in Middle East fighting. Tehran has threatened wider retaliation, and several Persian Gulf states have warned that another attack could trigger an even more destructive regional war.
A global rout in technology stocks is also weighing on precious metals, as investors retreating from the artificial intelligence trade sell bullion to cover losses elsewhere. The selloff eased on Monday, with Asian equities falling less than their Wall Street peers. Justin Lin, a strategist at Global X ETFs, said long-term investors who view the current price as cheap were providing some support. "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."
The metal's drop below $4,000 an ounce is testing investor resolve, with most of the nearly 150 tons added to gold-backed ETF holdings since mid-July now in the red. Ole Sloth Hansen, head of commodity strategy at Saxo Bank AS, said liquidity concerns and technical selling were overshadowing gold's longer-term appeal. Spot gold climbed 0.7% to $3,900.15 an ounce in Singapore, while silver gained 1.5% to $49.86 an ounce after dropping nearly 6% on Friday.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing