FX.co ★ Gold Extends Gain on US-Iran Optimism

Gold rose above $4,100 an ounce on Thursday, building on the previous session’s gains as Democratic victories in the US midterm elections bolstered expectations of a de-escalation in the US-Iran conflict and drove a sharp drop in oil prices. The precious metal also benefited from a weaker US dollar and falling US Treasury yields, factors that increased its appeal to investors.

President Donald Trump acknowledged that Republicans lost ground in the elections partly because of the war and noted that high gasoline prices contributed to the defeat. He also signaled that there were no immediate plans to intensify military action against Iran. Softer oil prices could help relieve inflationary pressures, easing worries about potential interest rate hikes in the near term.

Market participants are now focused on Friday’s closely watched US employment report, which could shape expectations for the Federal Reserve’s next policy moves. According to the CME FedWatch Tool, traders currently assign a 79% probability to a Fed rate increase in December.