Gold futures reacted unexpectedly to the midterm elections in the United States. The yellow metal fell, but not as much as anticipated. Oil also tumbled amid election worries and concerns of Iran sanction waivers.
It was speculated that gold prices would reach heightened volatility ahead of the elections. However, the COMEX gold for December delivery swung from a high of $1, 226.60 to a high of $1, 237.60 a troy ounce before settling down to $1, 226.30.
Analysts projected that if Democrats won Congress in the election, it would be significant for bullion, as Trump’s key policies would face opposition in the final two years of his term.
In forex trading, the dollar index, which generally runs opposite of gold, was up 0.4% to trade at 96.12. But currency traders project that the dollar will be flighty this week ahead of the policy statement expected from the Federal Reserve on Thursday.
The Fed has signaled that there will be a fourth interest rate hike in December, but no changes are anticipated for the current meeting. Despite higher interest rates, gold has stayed above $1, 200.
Other precious metals were also lower after the midterms. Silver futures dipped 0.9% to $14.52 a troy ounce. Palladium was down 1.9% to $1, 100.50 an ounce. Copper slid 0.9% to $2.732 per pound.
Platinum actually saw gains, increasing 0.2% to $871.50.
Elsewhere, oil tumbled amid Iran sanction waivers and concerns over the U.S. midterm elections. Crude futures fell as much as 2%, after details emerged that import waivers would be granted to buyers of Iranian crude. The move gave the impression that it may be business as usual for Tehran.
The market was also weighed by concerns that Republicans might lose control of Congress and put Trump’s policies in jeopardy.
U.S. crude fell 1.4%, or 89 cents, to trade at $62.21 per barrel. UK Brent crude dropped 1.6%, or $1.17, to trade at $72 per barrel. The figure was 16% lower than its four-year high of $86 reached last month.
The Trump administration announced earlier in the week that eight importers of Iranian crude – India, China, Italy, South Korea, Greece, Japan, Turkey and Taiwan – will be permitted to continue purchasing from the Islamic Republic “temporarily.” These waivers will be valid for 180 days.
Sanctions aside, Saudi Arabia has committed itself to maximizing production to offset supply shortages.
U.S. shale oil output has hit record highs, as domestic crude stockpiles are anticipated to rise for the sixth week in a row. The increased output has triggered fears of an oil glut.