Spot gold moved higher while spot silver fell in early U.S. trading Tuesday as investors faced the midterm elections and renewed tension involving Iran and the Strait of Hormuz. Gold traded near $3,965.80 an ounce, up $20.10, or 0.51%, while silver stood near $50.290, down $0.241, or 0.48%.
Crude oil rebounded after Monday’s sharp decline following reports of U.S. military strikes on Iran’s Qeshm Island. Persistent inflation concerns and expectations for additional Federal Reserve tightening continued to complicate the outlook for precious metals.
Recent U.S. economic reports showed resilient manufacturing activity alongside sustained inflation pressure. The Institute for Supply Management manufacturing purchasing managers’ index rose to 55.5 in October from 54.5 in September, beating expectations near 54.7 and recording a 10th consecutive month of expansion.
The production index advanced to 59.0 from 56.7, its highest reading since November 2021, while new orders edged up to 55.5 from 55.3. The employment index eased to 52.4 from 52.7, suggesting a modest slowdown in factory hiring.
The index for prices paid declined to 75.2 from 77.9, showing that manufacturing input costs continued rising, though more slowly. The data reinforced expectations that economic activity remains resilient enough to support restrictive monetary policy.
Investors were also assessing whether the midterm elections could change control of Congress and alter expectations for fiscal policy, government borrowing, regulation and Federal Reserve interest rates. President Donald Trump’s Republican Party controls both chambers, but polling favored Democrats to regain the House, while the Senate remained uncertain.
A divided Congress could restrict the administration’s ability to approve additional spending or tax legislation. That could reduce upward pressure on longer term Treasury yields and the dollar, potentially helping gold, although fiscal deficits would remain substantial.
Continued Republican control could preserve more room for fiscal expansion, potentially increasing expectations for Treasury issuance and longer term yields. Kitco Research found that gold gained an average of 14% during the 12 months following the previous 13 midterm elections.
The election arrives after October’s sharp precious metals correction and renewed volatility in artificial intelligence equities. Concerns about technology sector financing requirements and elevated valuations encouraged defensive positioning, while expectations for another Federal Reserve increase in December constrained gold’s recovery.
Third quarter gross domestic product expanded at an annualized 3.4%, while September core personal consumption expenditures inflation reached 3.1% annually. Those readings reinforced expectations for restrictive monetary policy, with the benchmark 10 year Treasury yield trading near 4.9% and the dollar remaining comparatively firm.
Tuesday’s calendar included September job openings and factory orders. Economists expected approximately 7.1 million openings, compared with 7.079 million previously, while factory orders were forecast to rise around 1.2%.
The ADP private sector employment report, international trade figures and October ISM services index were scheduled for Wednesday. Weekly initial jobless claims and third quarter productivity figures were due Thursday, followed by Friday’s October employment report.
Softer labor readings and easing inflation pressure could reduce expectations for a December rate increase, supporting gold through lower yields and a weaker dollar. Stronger employment and persistent cost pressure would reinforce the case for further tightening.
Tensions involving the Strait of Hormuz deteriorated after U.S. military strikes on Qeshm Island. U.S. officials described the strikes as defensive measures targeting military capabilities that threatened American assets and commercial shipping, while Iran’s Revolutionary Guard claimed it downed a U.S. MQ-9 drone.
The incidents followed several days of negotiations involving Iranian officials and Qatari mediators. A senior Iranian official said Washington and Tehran remained far from an agreement because of substantial differences involving sanctions, the U.S. naval blockade of Iranian ports and Iran’s nuclear activities.
Crude oil recovered after falling more than 7% Monday, with Brent futures approaching $106.13 a barrel and WTI trading near $97.91. Renewed concern about Gulf supply security followed the Qeshm Island strikes and warnings that a negotiated settlement remained distant.
Higher geopolitical uncertainty supported defensive demand for gold, but rising crude prices also threatened to reinforce inflation and expectations for tighter Federal Reserve policy. Silver remained more exposed to concerns about industrial demand, economic growth and broader investment risk appetite.
Global equity markets were mixed to weaker before the U.S. open. On Monday, the Dow Jones Industrial Average gained 0.41%, while the S&P 500 fell 0.51% and the Nasdaq Composite declined 1.07%.
Gold’s first resistance levels were identified at $3,975.00 and $4,084.00, with support at $3,871.00 and $3,797.00. Silver resistance stood at $51.270 and $53.280, while support was seen at $48.850 and $47.060.