* Specs increase net short positions in gold to highest in 3weeks
* Platinum scales more than 4-month peak
* GRAPHIC-2018 asset returns: (Recasts, updates prices, adds quotes)By Sumita LayekBENGALURU, Nov 5 (Reuters) - Gold fell on Monday asinvestors took some profits following a rally over the pastweek, but the market is cautious ahead of the U.S. midtermelections this week.Spot gold was down 0.3 percent at $1,229.03 per ounceby 1416 GMT, while U.S. gold futures was 0.2 percentlower at $1,230.50 per ounce."Gold had quite a move over the past few weeks... we haveseen a reduction in net-short positions because ofuncertainties, but over the last week, we've seen a spurt again. So I think we're seeing some profit taking," ING analyst WarrenPatterson said.Hedge funds and money managers raised their net shortposition in gold by 18,723 contracts to 45,622 contracts in theweek to Oct. 30, according to U.S. Commodity Futures TradingCommission data. This was the highest in three weeks. Investors kept a close eye on the U.S. midterm electionswhich may fuel interest in bullion as a hedge against risk ifthe result sparks volatility in the wider financial markets."We are just a day away from the U.S. midterm election, theoutcome of which could have an impact both on currencies andseveral asset classes...," said Saxo Bank analyst Ole Hansen.
Opinion polls show a strong chance that the Democratic Partymay win control of the House of Representatives in the electionson Tuesday after two years of wielding no practical politicalpower in Washington, with Republicans likely to keep the Senate. "Should the Democrats surprise, we would expect pressure onthe dollar and a move higher in the metals complex. Republicancontrol of the both the House and Senate should create sellingpressure," Peter Hug, global trading director at Kitco Metals,said in a note.Gold is down more than 5 percent this year, with investorsturning to the dollar as a haven from risk as a U.S. trade warwith China unfolded, and as higher U.S. interest rates offeredmore attractive returns than the non-yielding metal.Holdings of the world's largest gold-backed exchange-tradedfund, SPDR Gold Trust , fell 0.23 percent to 759.06 tonneson Friday, data from the fund showed. Among other precious metals, silver was down 0.4percent at $14.66 per ounce and palladium dipped 0.9percent to $1,126.40.Platinum fell 0.2 percent to $865.40 per ounce,having earlier hit its the highest since June 25 at $873.The gains in platinum could chiefly be attributed to shortcovering, considering the CFTC data, which showed "net shortpositions have been almost entirely reduced", Commerzbankanalysts said in a note. (Reporting by Sumita Layek and Karthika Suresh Namboothiri inBengaluru; Editing by Louise Heavens/Jan Harvey/Jane Merriman)
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