Gold jumped more than 3% on Wednesday as the dollar fell after Democrats won the US midterm elections. Investors now look to Friday's nonfarm payrolls report for clues on the Fed's next move, while traders see about an 83% chance of a December Fed hike.
Gold surged more than 3% on Wednesday, on track for its biggest daily gain since mid-August. The dollar tumbled after Democrats swept the US midterm elections, while investors watched this week's payrolls data for hints on the interest rate outlook.
Spot gold was up 3.4% at $4,059.95 per ounce by 2:04 p.m. EST (1904 GMT), while US gold futures for December delivery settled 3.4% higher at $4,073. The metal reclaimed the $4,000-an-ounce level after falling to $3,869.85 on October 30, its lowest level since October 2025.
Dollar drops to a one-month low
The Democratic win sent the dollar to its lowest in more than a month as investors weighed the prospect of tighter AI regulation and its potential drag on economic growth. A weaker dollar made dollar-priced bullion less expensive for overseas buyers, which boosted gold's appeal.
Jim Wyckoff, a market analyst at American Gold Exchange, said gold drew support from the weaker dollar. He pointed to the view that a Congress likely to be deadlocked on much legislation would probably be somewhat negative for the US economy, which could allow the Federal Reserve to lean into easier monetary policy.
Fed hike odds keep payrolls in focus
Inflationary concerns persisted, however, and Brent crude traded above $100 a barrel as investors awaited Washington's next move in the US-Israeli war on Iran. Traders see about an 83% chance that the Fed will raise rates in December, according to CME Group's FedWatch tool. A rate hike raises the opportunity cost of holding non-yielding gold.
The ADP National Employment Report showed US private payrolls growth increased in October, and the nonfarm payrolls report is due Friday. Deutsche Bank's Daniel Ghali, head of metals research, said: "A strong print may corroborate existing market expectations for Fed hikes on the horizon."
Other metals also rose. Spot silver gained 4.9% to $52.23, platinum rose 5.6% to $1,496.40, and palladium climbed 7.5% to $1,004.
Source: Investing.com (Reuters)
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