Today, gold rose slightly. The price increased by 0.7% to $3,903 per ounce. This helped recoup part of Friday's 3.7% collapse, the deepest in a year, and capped the worst October for gold since 2008. Silver rose 1.8% to $49.98 after nearly a 6% drop on Friday; platinum and palladium were little changed after sharp falls the day before.

Oil provided support. It fell after a report that Donald Trump wants to give diplomacy more time before deciding whether to resume strikes on Iran after Tuesday's midterm elections. This chain is important for gold because expensive energy had been feeding inflation, inflation kept Federal Reserve rates high, and high rates made a non-yielding metal less attractive. When oil declines, that pressure eases at least temporarily, benefiting gold buyers and hurting those who bet on further Fed tightening. Recall that last week PCE accelerated to 0.5% for the month, and on Monday Fed officials again spoke of the need for hikes.

The Middle East risk, however, has not disappeared. Trump previously threatened to resume strikes after the election, Tehran threatened a wider response, and several Gulf states fear a new attack could unleash an even more destructive regional war. If the diplomatic phase fails, oil will rise again, and with it pressure on gold via rate-expectation channels.

The second threat comes from equities. Friday's global sell-off in technology stocks forced investors to sell gold to cover losses in other assets. Today in Asia, the sell-off eased: regional equities fell less than U.S. ones, and U.S. index futures turned higher, which helped the metal. But the correlation remains, and a new wave of tech-sector selling could again turn gold into a liquidity source.

A separate story involves funds. Almost 150 tonnes bought into gold ETFs since mid-July are now mostly underwater. If funds begin exiting positions, that will add pressure to the price, and long-term investors will have to decide whether they are willing to endure the losses.

I believe the rebound will be limited until the fate of the Iran scenario is decided. Tuesday's midterms and Trump's decisions afterward will be the main guide for oil and, therefore, for gold. If diplomacy is given time, the metal can hold around $3,900 and partially recover losses on dip buying. If strikes resume, oil will move up and gold, in my view, will return to testing the year's lows.

As for the technical picture for gold, buyers need to take the nearest resistance at $3,906. That would allow targeting $3,954, above which a breakout will be difficult. The most distant target is the $4,001 area. In the event of a decline, bears will try to seize control of $3,849. If they succeed, a range breakout would deal a serious blow to bull positions and push Gold to a $3,802 low with the prospect of moving to $3,756.