Gold declines as traders weigh US-Iran diplomacy prospects

GOLD declined as traders assessed the prospects of diplomacy in the US-Iran conflict while refraining from taking big positions on the US midterm election day.

Bullion fell 0.5 per cent in afternoon trading in New York after earlier climbing as much as 0.6 per cent. Oil fell after unconfirmed reports of progress on peace talks on the US-Iran conflict, pushing bond yields higher and weighing on non-yielding bullion. 

Bloomberg reported that Iran and the US are reviewing fresh proposals from mediators on how to resolve their differences and avoid a return to all-out war, according to a diplomat briefed on the matter.

Iran state TV said no new development has been reached regarding an agreement, citing the spokesman for Iran’s negotiating team.

Crude and gold have mostly moved in opposite directions in recent months, with elevated energy prices fuelling expectations of tighter monetary policy — a headwind for the non-yielding metal. Bullion closed nearly 2 per cent higher on Monday as crude plunged.

Gold slumped almost 7 per cent in October, breaking decisively below the US$4,000-an-ounce threshold. The precious metal has also been caught up in the retreat from stocks linked to the artificial intelligence boom, with investors selling bullion during bouts of broader market liquidation.

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US voters head to the polls on Tuesday for midterm elections. For gold, “what’s most important is what it means for fiscal and monetary policy in the US, rather than the colour of the legislature,” said John Reade, chief market strategist at the World Gold Council.

“Should the House, and particularly if the House and the Senate were to change hands, I characterise it more as raising risk and uncertainty rather than having a directional impact in gold itself,” Reade said.

On the economic front, US job openings unexpectedly jumped in September to a four-month high and layoffs fell to the lowest level in over a year, signalling firmer demand for workers heading into the fourth quarter.

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Spot gold was down 0.5 per cent at US$3,925.25 an ounce as of 2.17 pm in New York. Silver was down 1.9 per cent to US$49.65 an ounce. Platinum and palladium also declined. The Bloomberg Dollar Spot Index, a gauge of the US currency, was up 0.3 per cent. REUTERS