Gold climbs back from one-year low as dip buyers arrest slide

Gold was finding some immediate support from long-term investors who see the current price as cheap, said Justin Lin, a strategist at Global X ETFs.

NEW YORK – Gold rose, as lower oil prices offered some respite from inflationary pressures and dip buyers were drawn by the metal’s slide on Oct 30 to the lowest in a year.

Bullion gained as much as 0.7% to nearly US$3,900 (S$4,990) an ounce, clawing back some losses after a 3.7% slump in the previous session that rounded off the worst October for the metal since 2008.

Oil dropped ahead of the Oct 27 US midterm elections, with US Secretary of State Marco Rubio saying that US President Donald Trump would prefer a diplomatic resolution to the Iran war.

Still, bullion remains vulnerable to any escalation in fighting in the Middle East.

Trump has repeatedly threatened to resume strikes on Iran after the US midterms, while Tehran threatened wider retaliation and several Persian Gulf states expressed concerns that another attack could unleash an even more destructive war across the region.

Recent selloffs have prompted investors to liquidate bullion to meet losses elsewhere, and stocks were set to fall again on Nov 2, tracking a rout on Wall Street fuelled by concerns around the artificial intelligence trade.

Gold was finding some immediate support from long-term investors who see the current price as cheap, said Justin Lin, a strategist at Global X ETFs.

“We are likely to see some dip buying in the Asian session today as investors, and possibly central banks, cautiously add to positions,” he said. “But gold is undoubtedly sitting at precarious levels.”

For now, liquidity concerns and technical selling were overshadowing the metal’s longer-term investment appeal, Ole Sloth Hansen, head of commodity strategy at Saxo Bank AS, wrote in a note.

Oct 30 is close below the key technical level of US$3,886 an ounce “leaves gold vulnerable to additional downside pressure,” he said, adding that a recovery to above US$4,000 would be needed to restore “a more neutral short-term outlook”.

Spot gold climbed 0.6% to US$3,899.39 an ounce at 7.45am in Singapore. Silver gained 1.3% to US$49.76 an ounce, having dropped nearly 6% on Oct 30.