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Gold prices steady ahead of U.S. midterm elections

Reuters  |  BENGALURU 

By Eileen Soreng

BENGALURU (Reuters) - Gold prices held steady on Monday as investors were cautious ahead of the U.S. due on Tuesday which will determine whether the Republican or controls

Spot gold was steady at $1,232.63 per ounce, as of 0644 GMT, while U.S. gold futures were flat at $1,233.5 per ounce.

"Traders don't want to extend any risk because of the growing uncertainty around the elections," said Stephen Innes, at in

Opinion polls show strong chances that the may win control of the in the Nov. 6 midterm elections after two years of wielding no practical political power in Washington, with Republicans likely to keep the

"We are seeing increasing weariness that the U.S. dollar could run out of steam, which naturally plays into gold... If we get a little bit of escalation of U.S. political risk that plays even more favourably into gold," Innes added.

The dollar index, which measures the greenback against a basket of six major currencies, edged down about 0.1 percent.

Dollar-denominated gold, which is used as an alternative investment during times of political and financial uncertainty, becomes less expensive for users of other currencies when the greenback weakens.

Asian stocks were hammered as fears of faster rate hikes in the and uncertainty around the Sino-U.S. trade war dented risk sentiment.

"Market reports on a potential escalation in U.S.-trade tariffs have laid fundamental support levels for the safe-haven asset as investors worry on weaker conditions in the global economy," Benjamin Lu, a with Phillip Futures, said in a note.

The and are not close to a deal to resolve their trade differences, the White House's top said on Friday, adding that he was less optimistic than previously that such an agreement would come together.

Spot gold may retrace to a support at $1,224 per ounce before, as it faces a resistance at $1,237, according to

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.23 percent to 759.06 tonnes on Friday.

Meanwhile, hedge funds and money managers raised their net short position in gold by 18,723 contracts to 45,622 contracts, according to data. This was the highest in three weeks.

Among other precious metals, silver was down 0.2 percent at $14.68 per ounce.

Platinum was up 0.5 percent at $871.30 per ounce, having touched a more than four-month high of $872.40 on Friday.

Palladium added 0.5 percent to $1,122 per ounce.

(Reporting by Eileen in Bengaluru; Editing and Richard Pullin)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, November 05 2018. 13:27 IST