Gold edges higher on softer oil prices; US midterms in focus

By Anushree Mukherjee

Nov 3 (Reuters) - Gold prices ticked up on Tuesday as a decline in oil prices slightly eased inflation concerns, while investors awaited the outcome of US midterm elections for fiscal policy clues.

Spot gold rose 0.2% to $3,953.37 per ounce by 9:07 a.m. ET (1407 GMT), rebounding from a 1% decline earlier in the session that took prices to a low of $3,893.31.

US gold futures for December delivery fell 0.2% to $3,963.50 per ounce.

Oil prices fell about 2% on Tuesday after President Donald Trump said the US would end billions of dollars of annual military support to Israel. O/R

The recent reports triggered a sharp drop in oil prices, helping lift precious metals, said Phillip Streible, chief market strategist at Blue Line Futures.

Traders saw a 73% probability of a December Federal Reserve rate increase, compared with 76% earlier in the day, CME's FedWatch Tool showed. A slight pullback in rate hike expectations lent support to gold by improving the appeal of non-yielding assets.

Attention is focused on Tuesday's US midterm elections, with polls and nonpartisan analysts favouring Democrats to wrest control of the House from Republicans, while control of the Senate remains uncertain.

"A Democratic clean sweep could potentially put pressure on the US dollar by making it harder for the administration to pass law, including measures related to the debt ceiling. If the dollar falls, that's one way gold could potentially find some support," said Fawad Razaqzada, market analyst at Forex.com.

Meanwhile, the World Gold Council cut its forecast for growth in gold investment this year to 200 metric tons from 400 tons estimated previously, citing weaker appetite for bars and coins. It, however, raised its estimate for central bank purchases.

Among other metals, spot silver slipped 0.92% to $50.16 per ounce, platinum fell 0.82% to $1,437.31 and palladium dropped 2.62% to $943.57.