Gold prices ease as U.S. midterm vote keeps markets cautious

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Gold prices ease on midterms

Highlights

Spot gold declines 0.5% to $3,926.52 per ounce after a previous 2% surge, as U.S. midterm election uncertainties keep markets cautious.
Analysts note gold is being liquidated to cover losses elsewhere instead of acting as a safe haven, with potential additional pressure if U.S. tech stocks face tighter regulation after the elections.
Oil prices drop over 7%, helping ease inflation expectations, but markets still assign a 74% probability to a Fed rate hike in December, raising bullion's opportunity cost.

Price moves and election focus

As reported by Reuters, spot gold falls 0.5% to $3,926.52 per ounce by 0353 GMT after rising more than 2% in the previous session to $3,954.41 and recovering from a one-year low hit on Friday. U.S. gold futures for December delivery drop 0.8% to $3,936.30 as traders await the outcome of the U.S. midterm elections later in the day.

Tim Waterer, chief market analyst at KCM Trade, says gold remains in consolidation mode after heavy selling last week. He says the metal is being sold as a high-liquidity asset to cover losses and margin calls elsewhere, rather than being bought as a traditional safe haven, a pattern that is weighing on prices in the current environment.

Waterer adds that a Democratic sweep could create more difficulties for AI data-centre expansion and the broader technology trade. Any added pressure on technology stocks from tighter regulatory scrutiny could spill over into gold if investors keep cutting positions to meet losses in other assets.

Oil, rates and broader metals impact

On the geopolitical front, Tehran says contacts between Iran and the United States to end their eight-month war are continuing after recent talks with Qatari mediators produce altered proposals but no breakthrough. Oil prices fall more than 7% on Monday, helping ease inflation concerns that had supported expectations of higher energy-driven price pressures.

Even so, elevated energy prices generally raise the likelihood that the Federal Reserve keeps interest rates higher for longer, increasing the opportunity cost of holding bullion. Traders currently see a 74% chance that the central bank raises rates in December, according to CME's FedWatch tool.

Among other precious metals, spot silver slips 1.8% to $49.71 per ounce, platinum drops 0.2% to $1,446.80 and palladium dips 1.4% to $953.64.

Our earlier article on Republicans’ midterm advertising surge outlined how the GOP sharply ramped up spending as polling tightened, with once-safe races becoming unexpectedly competitive. We also noted that high fuel costs and broader affordability pressures were emerging as key voter concerns, influencing campaign strategy and resource allocation in pivotal Senate and House contests.

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