Gold range-bound as traders tread cautiously ahead of midterms

Bengaluru — Gold held a narrow $5 range on Monday as investors were cautious ahead of the US midterm elections, which will determine whether the Republican or Democratic party controls Congress.

Spot gold was little changed at $1,232.00/oz, by 10.05am GMT, while US gold futures were flat at $1,233.2/oz.

“The market is adopting a wait-and-see approach,” said Saxo Bank analyst Ole Hansen.

“We are just a day away from the US midterm election, the outcome of which could have an impact both on currencies and several asset classes, so we’re holding relatively stable.”

Opinion polls show strong chances that the Democratic Party may win control of the House of Representatives in the November 6 elections after two years of wielding no practical political power in Washington, with Republicans likely to keep the Senate.

The dollar index was down 0.1% after three consecutive weeks of gains as investors took profits before the elections that may fuel a new bout of volatility for global markets.

“Midterm elections may stimulate safe-haven buying,” said Vandana Bharti, assistant vice-president of commodity research at SMC Comtrade.

“If it stays above $1,240, then the next target for the upside should be $1,250- $1,260.”

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.23% to 759.06 tons on Friday.

Hedge funds and money managers raised their net short position in gold by 18,723 contracts to 45,622 contracts in the week to October 30, according to US Commodity Futures Trading Commission data. This was the highest in three weeks.

Among other precious metals, silver was up 0.2% at $14.74/oz.

Platinum edged up 0.2% to $868.70/oz, the highest since June 25, while palladium rose 0.7% to $1,124.30. 

Reuters