Gold climbs back from one-year low as dip buyers arrest slide

On October 30, gold prices rose as dip buyers took advantage of the metal's slide to a one-year low. Lower oil prices also provided respite from inflationary pressures, helping to arrest the slide. Bullion surged as much as 0.7% to nearly US$3,900 per ounce, recovering from a 3.7% drop in the previous session, marking the worst October for gold since 2008.

However, gold remains sensitive to any escalation of conflict in the Middle East, with the US threatening to resume strikes on Iran after the midterm elections. Trump has threatened to resume strikes on Iran, while Tehran has warned of wider retaliation. Several Persian Gulf states have expressed concerns about a potential escalation of the conflict.

Strategist Justin Lin noted that some dip buying was likely in the Asian session as investors, possibly including central banks, cautiously added to their positions. However, gold's current price was seen as cheap by long-term investors, but it was also considered precarious. For now, liquidity concerns and technical selling were overshadowing gold's longer-term investment appeal, according to Ole Sloth Hansen, head of commodity strategy at Saxo Bank AS.

The price of gold fell below the key technical level of US$3,886 an ounce, making it vulnerable to additional downside pressure. To restore a more neutral short-term outlook, a recovery above US$4,000 was necessary. Spot gold climbed 0.6% to US$3,899.39 an ounce at 7:45 am in Singapore. Silver gained 1.3% to US$49.76 an ounce, while platinum and palladium also benefited from the previous session's declines. The Bloomberg Dollar Spot Index was marginally higher.