Gold prices edged lower in early Asian trade on Tuesday as the dollar strengthened, while investors awaited U.S. midterm election results for market direction.
Spot gold was down about 0.2 percent at $1,228.20 per ounce at 0452 GMT while U.S. gold futures fell 0.2 percent to $1,230.5 per ounce.
“Dollar is a little bit firmer so that’s putting some pressure on gold,” a Hong Kong-based trader said, adding, gold will be trading mostly sideways until the midterm elections results.
Investors braced themselves for U.S. midterm elections due later in the day which may fuel interest in bullion as a hedge against risk if the result sparks volatility in the wider financial markets.
The dollar index, which measures the greenback against a basket of six major currencies, was up about 0.1 percent, while Asian shares wobbled supported by Wall Street gains although sentiment was tempered ahead of the elections.
Dollar-denominated gold, which is used as an alternative investment during times of political and financial uncertainty, becomes more expensive for users of other currencies when the greenback firms.
“The market is closely watching out for the results of the elections … If either of the parties win there will be impacts on the economy and the dollar,” said Argonaut Securities analyst Helen Lau.
Opinion polls show strong chances the opposition Democratic Party may take over the House of Representatives after two years of wielding no practical political power in Washington, while Donald Trump’s Republican Party is tipped to retain the Senate.
Bullion traders also awaited Federal Reserve meeting due later this week to gauge the outlook for U.S. monetary policy.
“I think people would be looking to buy gold towards the 1,225-1,220 area and have to let it go towards 1,235-1,240 area,” the Hong Kong-based trader said.
Meanwhile, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.23 percent to 757.29 tonnes on Monday.
Among other precious metals, silver was flat at $14.63 per ounce and palladium was down 0.3 percent at $1,129.50.
Platinum fell 0.4 percent to $860.49 per ounce. Prices had touched their highest since June 25 at $873 in the previous session.