Gold Performance 3rd November: gold price slips, US vote count up next

The gold price closed at about $3,931 an ounce on Tuesday 3 November, down $16, or 0.4%, from Monday's close. A firmer dollar and higher US Treasury yields outweighed another fall in oil, as Americans voted in the midterm elections and traders added to bets on a Federal Reserve rate hike in December.

Where did gold fall on Tuesday?

Most of the damage came in Asian trade. Gold held near Monday's close after the reopening, then slid about $36 through the Asian session, giving back part of Monday's 1.8% jump. It touched the day's low near $3,897 early in the London morning.

London won back more than half of that, and gold was near $3,933 when New York opened. Then came a burst of buying that added about $53 in an hour, the biggest swing of the day, and carried gold to a high near $3,969 shortly before the New York stock market opened.

It did not last. Gold faded through the New York morning and spent the afternoon between roughly $3,920 and $3,935, finishing about $11 lower on New York hours.

Why did the gold price fall?

The dollar and yields rose. "The dollar has been strengthening, and yields are going higher," Phillip Streible of Blue Line Futures told Reuters, in a report carried by Kitco. December gold futures settled 0.7% lower, near $3,940. A stronger dollar makes gold dearer for buyers outside the US, and higher yields raise the cost of holding a metal that pays nothing, the link explained in why gold falls when rates rise.

Oil fell, but this time gold did not follow. Crude slipped to a three-week low on talks to end the wars in Ukraine and Iran. On Monday the same move lifted gold. On Tuesday it did little to cool rate fears: the chance of a December hike on the CME FedWatch tool rose to 79% by the New York afternoon, from 74% in Asian hours. Last week's Fed decision, with two votes for a hike, set up that debate.

Gold is still a source of cash. Tim Waterer of KCM Trade said gold "continues to be sold as a high-liquidity asset to cover losses and margin calls elsewhere". He warned that a Democratic sweep could hurt AI and tech shares, and that selling there could spill into gold. Polls favoured Democrats to take the House, with the Senate too close to call.

The World Gold Council added a softer note, halving its forecast for growth in gold investment this year to 200 tonnes from 400, while raising its estimate for central bank buying. Silver fell about 1.9% to near $49.70.

How does gold stand this week?

On our data, Tuesday's dip still leaves gold 1.4% higher this week, after Friday's close at a one-year low near $3,876. The wider picture is weaker. Gold sits about 27.5% below January's record near $5,426, is down 9.2% since the start of the year, and trades roughly $300 under its 50-day average.

Up next: what to watch tomorrow

• Wed 4 Nov: US midterm results, counted through New York's evening and Asia's Wednesday morning. Investors want clues on fiscal policy from who controls Congress.
• Wed 4 Nov: US ADP private payrolls for October at 8:15 am New York time, then the ISM services survey at 10 am, both read for December hike odds ahead of Friday's jobs report.
• Wed 4 Nov: The US Treasury's quarterly refunding announcement, which sets the size of bond auctions for the months ahead.