Nov 3 (Reuters) - Gold pared earlier gains to edge lower on Tuesday as a higher dollar and Treasury yields pressured the metal, while investors awaited the outcome of US midterm elections for fiscal policy clues.
Spot gold slipped 0.5% to $3,927.18 per ounce by 2:06 p.m. ET (1906 GMT). An earlier 1% decline took gold prices to a session low of $3,893.31. A decline in oil prices had eased some inflationary concerns and allowed bullion a short gaining spell, before prices fell again.
US gold futures for December delivery settled 0.7% lower at $3,940.40 per ounce.
Oil prices fell to a three-week low as the market weighed talks to end the wars in Ukraine and Iran against worries about additional supply disruptions from recent attacks in both conflicts.
"The dollar has been strengthening, and yields are going higher," pressuring gold, said Phillip Streible, chief market strategist at Blue Line Futures.
The greenback rose modestly as investors gauged uncertainty over a possible US-Iran deal and the outcome of the midterm elections, while Treasury yields also edged higher.
A slight pullback in rate hike expectations improved the appeal of non-yielding assets, supporting gold. Traders now see a 79% probability of the Federal Reserve increasing rates in December, according to CME's FedWatch Tool, opens new tab.
Attention is focused on Tuesday's US 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. It, however, raised its estimate for central bank purchases.
Spot silver slipped 1.9% to $49.69 per ounce, platinum fell 1.9% to $1,421.18 and palladium dropped 3.4% to $935.73.
Reporting by Anushree Mukherjee and Vishak Mathew Bengaluru; Editing by Joyjeet Das
