- Gold erased Friday’s drop. Bullion gained as much as 1.6% on Monday to top $4,130 an ounce, and spot gold was up 0.9% at $4,105.88 at 7:05 a.m. in London, Bloomberg reported. Silver rose 1.2% to $52.52.
- Oil and the dollar helped. Oil extended its largest weekly decline since April 2020 on diplomacy to end the U.S.-Iran war, easing inflation worries, while the Bloomberg Dollar Spot Index fell 0.2%, making metals cheaper for many buyers.
- The Fed is the ceiling. Gold’s post-midterm recovery stalled late last week after strong U.S. jobs data reinforced expectations of a December Fed rate hike, and markets still expect a hike because energy prices remain high.
- Central banks keep buying. The People’s Bank of China extended its gold-buying streak to two years in October, and World Gold Council data showed official-sector purchases of a net 321 tons in July-September, the most since the fourth quarter of 2024.
What Happened?
Gold rose Monday, erasing its Friday decline, as lower oil prices eased inflation worries and a rebound in Asian stocks reduced pressure to sell bullion, Bloomberg reported. Prices climbed as much as 1.6% to top $4,130 an ounce, resuming a modest recovery that followed last week’s U.S. midterm elections. Treasury yields and oil had fallen in recent sessions on bets that incoming Democrats would press to end the Iran conflict and that divided government would constrain spending and borrowing. Spot gold was up 0.9% at $4,105.88 at 7:05 a.m. in London, silver rose 1.2% to $52.52, platinum was little changed and palladium gained.
Why It Matters?
Gold is caught between supportive politics and a hawkish Fed. Higher interest rates weigh on bullion because it pays no interest, and markets still price a December hike as energy prices stay stubbornly high. Hebe Chen of Vantage Global Prime said political uncertainty is supporting gold while shifting Fed expectations and Treasury yields cap the recovery. Steady official-sector demand, including two years of People’s Bank of China purchases, remains a structural floor under prices.
What’s Next?
Tuesday’s U.S. consumer price index report is the key test: Chen called it the next battleground between safe-haven demand and a dollar-driven ceiling. A softer print could revive bets against a December hike and extend gold’s rebound, while a hot reading would likely strengthen the dollar and yields.
Affected Tickers and Coins: GLD, SLV, UUP
Source: Bloomberg
