Gold edged higher as traders weighed lower oil prices against interest-rate expectations, with U.S. midterm results and the Bank of England’s next decision also on the calendar for global markets.
Reuters reported spot gold was at $3,960.80 an ounce, up 0.3%, at 7:32 p.m. ET Monday (0032 GMT Tuesday). Bullion had gained more than 2% in the previous session and was recovering from a one-year low reached Friday. December U.S. gold futures were little changed at $3,970.80. EconoTimes previously covered gold’s decline as an oil rally raised rate concerns.
Oil prices dropped after diplomatic contacts involving Iran and Qatari mediators raised hopes of progress, Reuters reported, though no agreement was confirmed. Brent crude settled down $8.66, or 7.63%, at $104.77 a barrel Monday. U.S. West Texas Intermediate fell $7.66, or 7.36%, to $96.46. Reuters quoted UBS analyst Giovanni Staunovo describing the oil market’s response to Middle East headlines as “extreme sensitivity.”
U.S. manufacturing measures sent mixed signals on prices. The Institute for Supply Management’s October Manufacturing PMI rose to 55.5 from 54.5 in September, while its Prices Index fell to 75.2 from 77.9 but remained in increasing territory. The index tracks manufacturers’ raw-material costs; it is not a direct measure of factory-gate inflation.
The Federal Reserve held its target range at 3.75% to 4% on Oct. 28 and said inflation remained elevated. Federal Reserve officials Lisa D. Cook and Beth M. Hammack dissented in favor of a quarter-point increase. Reuters cited CME FedWatch as showing a 73% market-implied chance of a December hike; CME says the tool estimates probabilities from federal funds futures, not the Fed’s own forecast. Reuters also noted that gold pays no interest, making rate expectations relevant to its appeal relative to interest-bearing assets.
Investors were looking to Tuesday’s U.S. midterm elections for clues about fiscal policy. All 435 House seats and roughly one-third of Senate seats are contested; the vote will decide which party controls each chamber for the next two years. The Bank of England is scheduled to announce its next decision Nov. 5. Economists polled by Reuters expected it to raise the current 3.75% Bank Rate to 4%, but that was a forecast, not a decision.
