Gold extended its rally on Thursday as a rout in technology stocks pushed traders toward safe-haven assets. Concerns about AI regulation under a Democratic Congress drove the selling, and attention now turns to Friday's nonfarm payrolls and an expected December Fed hike.
Gold prices ticked up on Thursday, extending the previous session's rally as a rout on Wall Street dominated the spotlight. Traders dumped technology stocks and flocked to safe-haven assets such as Treasury bonds and the Japanese yen.
Spot gold climbed 0.7% to settle at $4,089.12/oz, while gold futures added 0.6% to settle at $4,097.90/oz.
Midterm result shifts focus to AI regulation
A day after a sweeping Democratic victory in the U.S. midterm elections, markets turned to its possible political consequences. With Democrats in control of both chambers of Congress, concerns grew that the party could pursue greater regulation of AI and try to slow the spread of massive data centers.
The AI infrastructure buildout has played a key role in boosting the U.S. economy, according to the report. Any hit to it could therefore affect growth and take the shine off the dollar, and a weaker dollar can boost gold because it makes bullion cheaper for foreign buyers.
LPL Financial's Adam Turnquist pointed to copper as a sign of relief. He said copper remains above its rising 200-day moving average and September lows, which suggests selling in AI-exposed stocks may be getting overdone.
Jobs data and Fed hike expectations
Meanwhile, U.S. initial jobless claims for the week ending October 31 fell 6k to 189k, according to the U.S. Department of Labor. Challenger, Gray & Christmas reported October layoffs of 43,994, the lowest for that month since 2023.
Attention now turns to Friday's nonfarm payrolls. The Federal Reserve is expected to hike rates in December to help quell inflationary pressures, and further signs of labor market resilience could give it more headroom to lift borrowing costs. Higher rate environments tend to weigh on non-yielding assets such as gold.
Source: Investing.com
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