Gold price prediction: Will gold extend gains on Tuesday? Check outlook for November 3

TIMESOFINDIA.COM

Investors are now looking to the US midterm elections for indications of the country's fiscal policy direction and their potential impact on broader market sentiment. Traders currently see a 73% probability of the Federal Reserve raising interest rates in December, according to CME's FedWatch tool. Higher interest rates increase the opportunity cost of holding non-yielding assets such as gold, making bullion less attractive to investors.

In the international market, spot gold rose 0.3% to $3,960.80 per ounce, building on its recovery from a one-year low touched on Friday. US gold futures for December delivery remained steady at $3,970.80.

Gold price outlook for November 3

Manoj Kumar Jain of Prithvi Finmart expects gold and silver prices to remain volatile this week, driven by fluctuations in crude oil prices and the dollar index, along with geopolitical tensions.

He said gold has support at $3,940-3,880 per troy ounce, while resistance is placed at $4,000-4,044. Silver has support at $49.40-48.80 per ounce, with resistance at $51.80-52.40.

On the MCX, gold has support at Rs 1,39,400-1,38,200 and resistance at Rs 1,41,400-1,42,000. Silver has support at Rs 1,81,400-1,80,000, while resistance is seen at Rs 1,85,500-1,88,000.

Jain suggested that long-term investors could accumulate gold and silver through systematic investment plans (SIPs) amid the market decline. However, he advised traders to remain cautious ahead of the US midterm elections.

In the international market, Bank of America (BofA) expects gold to remain below $4,000 over the next three months, while forecasting an average price of $4,000 an ounce in the fourth quarter. Its demand tracker points to a 16.6% year-on-year decline in purchases by key buyers. Indian imports fell 77.8%, while Chinese imports increased 39.3%.

Jewellery demand has also weakened. Data from the World Gold Council shows that jewellery demand declined 25% in the US, 15% in India and 28% in China during the second quarter.

Central bank activity presents another potential headwind following a period of strong buying earlier this year. In its October 12 note, BofA flagged the possibility that central banks could turn sellers amid escalating tensions in the Middle East. “With the Middle East conflict escalating again, there is a risk that central banks could resume sales,” BofA said, according to a Yahoo Finance report.

The bank pointed to Turkey’s net gold sales of 82 tonnes and Russia’s 56 tonnes through August, according to the World Gold Council, as examples of this trend.

Inflation and monetary policy are adding to the pressure. US consumer prices rose 3.7% year-on-year in September, exceeding the 3.6% forecast, while core inflation came in at 2.6%, also above expectations. The Federal Reserve raised interest rates to 3.75%-4% in September, with officials signalling one more hike this year. BofA believes gold may bottom only after the Fed exits its tightening cycle. A pause in the dollar’s rally and an easing of concerns surrounding the Iran war could also help the metal recover.

US midterm elections is the immediate trigger

All eyes are now turning to the US midterm elections and upcoming labour-market data. The election results could have significant implications for expectations around fiscal policy, government spending, Treasury issuance and political uncertainty. Meanwhile, employment figures will be crucial in assessing whether the Federal Reserve has scope for another interest rate hike.

Overall, gold remains exposed to the risk of elevated real yields and further cross-asset liquidation in the near term. However, bargain buying, geopolitical uncertainty, demand from China and rising concerns over US fiscal sustainability could provide stronger support to prices following the sharp correction in October.