Gold climbs 3% as Brent crude drops 9% on Iran diplomacy hopes
Spot gold rose about 3.3% to $4,060 per ounce, its biggest daily gain since August, while Brent crude fell roughly 9% amid expectations of diplomatic progress with Iran after the U.S. midterm elections.
Spot gold increased about 3.3% to roughly $4,060 an ounce, marking its strongest daily rise since August. The gain came as Brent crude prices slipped about 9% to around $94.50 a barrel, the lowest level since early September, and U.S. crude fell to near $88 a barrel. The dollar weakened to a one-month-plus low and Treasury yields eased, supporting the bullion rally in Asian trading.
The price moves followed the outcome of the U.S. midterm elections, in which Democrats secured control of both chambers of Congress, raising expectations for a diplomatic approach to the conflict with Iran. President Trump said the United States had no immediate plans for military action, and Qatar increased its mediation role, while an Iranian official noted that Tehran and Washington remained far from an agreement.
Citi’s global head of commodities research, Max Layton, said that a sustained decline in oil prices could encourage the Federal Reserve to shift from rate hikes to cuts, which would boost investment demand for gold. Citi projects a three-month target of $4,500 per ounce and a six-to-twelve-month target of $5,000, assuming de-escalation of the conflict and the reopening of the Strait of Hormuz.
Nevertheless, futures markets still price a high probability of a December rate hike, with CME’s FedWatch tool indicating about an 83% chance. The next catalysts for gold include U.S. payroll data and any concrete progress in Iran talks. A durable drop in oil that influences Fed expectations could reinforce Citi’s outlook, while renewed regional tensions could reverse the rally.