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Gold Prices Slip as Investors Digest U.S. Midterm Results, Dollar Also Down

Gold prices slipped while the dollar also fell on Thursday

Investing.com - Gold prices slipped while the dollar also fell on Thursday as investors digested the U.S. midterm election results.

Democrats won control of the House of Representatives while Republicans retained their hold on the Senate, as the U.S. midterm election's outcome split Congress.

U.S. President Donald Trump suggested he would work with Democrats on policy initiatives in order to promote economic growth.

Looking ahead, markets are likely to switch their focus to the Federal Reserve's monetary policy decision due later in the day.

The Fed is not expected to raise interest rates until its next gathering in December. The central bank has hiked rates three times this year on the back of strong economic data. The Fed has signalled a rate rise in December and two more hikes by mid-2019.

Higher US interest rates tend to boost the dollar and also push up bond yields, reducing the appeal of non-yielding bullion.

Gold futures for December delivery on the Comex division of the New York Mercantile Exchange slipped 0.1% at $1,231.7 a troy ounce by 1:52 AM ET (05:52 GMT).

“Gold has found support around $1,223. If we see good news from the Fed, we may see a bounce. But for now, we think the Fed will continue with the monetary policy tightening,” said Benjamin Lu, a commodities analyst with Phillip Futures.

Meanwhile, the U.S. dollar index that tracks the greenback against a basket of other currencies was down 0.01% at 96.00.

"The dollar is likely to benefit as we still expect the Fed to maintain its hawkish stance. The U.S. economy needs rising rates as wage pressures are building and there is a risk of an overheating of the economy,” said Sim Moh Siong, currency strategist at Bank of Singapore.

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