Gold prices ticked lower on Tuesday, after surging more than 2% in the previous session on a drop in oil prices that eased inflation concerns, while investors awaited the outcome of US midterm elections later in the day.
Spot gold fell 0.5% to $3,926.52 per ounce by 0353 GMT. Prices climbed over 2% to $3,954.41 per ounce in the previous session, rebounding from a one-year low it hit on Friday.
US gold futures for December delivery dropped 0.8% to $3,936.30.
"Gold is still in consolidation mode after the price pummelling it took last week," said Tim Waterer, chief market analyst at KCM Trade.
"Gold continues to be sold as a high-liquidity asset to cover losses and margin calls elsewhere rather than being bought as a traditional safe haven. That characteristic is working against it in the current environment," Waterer added.
On the geopolitical front, Tehran said on Monday, contacts between Iran and the United States to end their eight-month war were continuing after days of Iranian talks with Qatari mediators ended with altered proposals but no breakthrough. Oil prices fell over 7% on Monday.
Elevated energy prices raise expectations that the Fed will keep interest rates higher-for-longer, increasing the opportunity cost of holding non-yielding bullion.
Traders currently see a 74% chance that the central bank will raise rates in December, according to CME's FedWatch tool.
Market participants now await the US midterm elections later today and their potential impact on broader market sentiment.
"A Democratic sweep would likely prove more problematic for the AI data-centre build-out and the broader tech trade. Any further pressure on the tech complex from increased regulatory scrutiny could therefore spill over into gold as positions continue to be cut to cover losses elsewhere," Waterer said.
Among other metals, spot silver slipped 1.8% to $49.71 per ounce, platinum dropped 0.2% to $1,446.80 and palladium dipped 1.4% to $953.64. - Reuters
