Gold prices held steady near $3,930 an ounce on Wednesday as investors monitored diplomatic developments in the Middle East and awaited US midterm election results for signals on future interest rates and fiscal policy. Early tallies showed Democrats gaining ground in several key races, raising the prospect of a shift in congressional control and injecting additional uncertainty into the outlook for US fiscal strategy.
At the same time, softer oil prices continued to support bullion, with crude trading near a four-week low amid mixed messages on US-Iran negotiations. Tehran and Washington were reported to be reviewing proposals from mediators following alleged US airstrikes on Iran’s Qeshm Island. Lower energy prices could help ease inflation pressures and temper expectations for an extended period of monetary tightening, enhancing the relative appeal of non-yielding gold.
Still, markets largely anticipate further policy tightening, with the CME FedWatch Tool indicating a 78% probability of a Federal Reserve rate hike in December.
