Gold eases from two-week top; holds comfortably above $4,100 as USD sticks to bearish tone

Gold prices slipped slightly from a two-week high, yet they maintained gains for the second consecutive day, trading near $4,130. The decline was driven by the US Dollar's weakness due to the recent US election results, which saw Democrats win the midterm elections. This victory reduced uncertainty and diminished expectations of a resumption of military action against Iran.

As a result, crude oil prices dipped to a two-month low, alleviating inflation concerns and further supporting the US Dollar. Analysts at MUFG/BTMU noted that the Democrats' landslide victory surpassed expectations, but the financial market's response was relatively muted. They suggested that a change in the political landscape could reverse the current dollar weakness.

However, the anticipation of a Federal Reserve rate hike remained high, with traders betting on an 80% probability of a December increase. The Bank of England, Bank of Japan, and the European Central Bank were also expected to raise interest rates. These factors combined to caution traders before positioning for further Gold appreciation, as they awaited crucial economic data such as the US Nonfarm Payrolls report and speeches from key Federal Open Market Committee members.