Gold rebounds 0.7% as oil price decline eases inflation fears, dip buyers step in

Still, bullion remains vulnerable to any escalation in fighting in the Middle East. Trump has repeatedly threatened to resume strikes on Iran after the 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. A global rout in technology stocks is also adding pressure to precious metals.

Recent selloffs have prompted investors to liquidate bullion to meet losses elsewhere, and stocks were set to fall again on Monday, tracking a rout on Wall Street fueled 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. Friday’s close below the key technical level of $3,886 an ounce “leaves gold vulnerable to additional downside pressure,” he said, adding that a recovery to above $4,000 would be needed to restore “a more neutral short-term outlook.”

Spot gold climbed 0.6% to $3,899.39 an ounce at 7:45 a.m. in Singapore. Silver gained 1.3% to $49.76 an ounce, having dropped nearly 6% on Friday. Platinum and palladium also gained after big declines in the previous session. The Bloomberg Dollar Spot Index, a gauge of the US currency, was marginally higher.