Gold falls after oil rebounds on lack of US-Iran deal progress

Gold fell, paring Monday’s rebound, as oil rose on renewed doubts that the US and Iran are close to an agreement to end their war.

Bullion fell as much as 1.3% to trade near $3 900 an ounce Tuesday. Oil gained after Reuters reported that the two sides remain far from reaching an agreement, citing an unnamed Iranian official, while smaller-scale US strikes on the Islamic Republic continued.

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

“The relief proved short-lived as the oil price decline was not sustained,” said Christopher Wong, a strategist at Oversea-Chinese Banking Corp. “We remain cautious in the near term and would not rule out further consolidation or downside pressure as markets search for a floor.”

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Gold 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. The precious metal slumped almost 7% in October, breaking decisively below the $4 000-an-ounce threshold.

US voters head to the polls on Tuesday for the 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.

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“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.

Spot gold fell 1% to $3 906.21 an ounce as of 11:02 a.m. in London. Silver was down 3.3% at $48.97, erasing gains from the previous session. Platinum and palladium also declined. The Bloomberg Dollar Spot Index, a gauge of the US currency, was little changed.

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