Gold came off a one-week low to trade higher on Wednesday as investors sought cover from market volatility and uncertainty surrounding the fallout of U.S. mid-term elections results.
Spot gold was up 0.2 percent at $1,228.52 per ounce, as of 0625 GMT, having touched its lowest since Nov. 1 at $1,222.90 earlier in the session.
U.S. gold futures was 0.3 percent higher at $1,229.5 per ounce.
“The spectre of a Democrat-controlled House suggests that we will see a little bit of risk-off in the market, which should probably benefit gold in parts,” said ANZ analyst Daniel Hynes.
Democrats rode a wave of dissatisfaction with President Donald Trump to win control of the U.S. House of Representatives.
The win creates a clear hurdle for Republicans to easily pass legislation through both chambers of Congress, clouding the outlook for some of Trump’s key economic proposals.
Wall Street stock futures and Asian shares held earlier gains on the election news, while the dollar weakened against most of other major counterparts, helping bullion’s appeal among holders of other currencies.
While the outcome of the elections were broadly in line with market expectations, a reason markets did not sell off, the prospect of political gridlock creates some uncertainty for investors.
“In the short- and medium-term, gold will be bullish from here,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
Investors also awaited a two-day meeting of the Federal Reserve starting later in the day to gauge the outlook for U.S. monetary policy.
Fed policymakers are not expected to raise key rates, but traders are waiting to see whether they offer clues about possible rate increases in December and in 2019, analysts said.
“The outcome of the U.S. mid-term congressional elections and a two-day U.S. Federal Reserve meeting will likely keep trading activities tight for gold prices today,” Benjamin Lu, a commodities analyst with Phillip Futures, said in a note.
Spot gold may break a support at $1,224 per ounce and fall to the next support at $1,211, according to according to Reuters technical analyst Wang Tao.
Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell for the third straight session to 756.70 tonnes on Monday.
Among other precious metals, silver rose 0.3 percent to $14.57 per ounce, while palladium slipped 0.1 percent to $1,114.49 per ounce.
Platinum gained 0.5 percent to $871.5 an ounce. In the previous session, it touched its highest since June 25 at $875.70.