Gold prices climbed more than 1% to above $3,940 an ounce on Monday, rebounding from a more than one-year low of $3,870.27 reached on Friday. The recovery came as falling oil prices eased inflation concerns and investors shifted their focus to the November 3 US midterm elections.
The metal had come under pressure on Friday after a sharp selloff in technology and AI stocks sparked a dash for cash, prompting investors to liquidate even traditionally safe-haven assets such as gold. Since then, growing optimism about a possible US-Iran diplomatic breakthrough, together with renewed doubts about the durability of the AI boom, has led markets to reassess the outlook for further Federal Reserve tightening.
At the same time, oil prices slumped after Iranian and Qatari officials held a third straight day of talks aimed at ending the US-Israeli war on Iran. Softer oil prices may help ease inflationary pressures and curb expectations that interest rates will remain elevated for an extended period, thereby reducing the opportunity cost of holding non-yielding assets like gold.