Gold prices rose 2% on Wednesday as a weaker US dollar followed Democratic victories in the midterm elections. Investors now look to the non-farm payrolls data for clues on the Federal Reserve's policy path.
Gold prices rose 2% on Wednesday, supported by a weaker US dollar after Democrats secured key victories in midterm elections. Spot gold climbed 2.2% to $4,016.01 per ounce by 0619 GMT. US gold futures for December delivery rose 2.2% to $4,026.90.
Weaker dollar and lower yields back bullion
Chris Weston, head of research at Pepperstone, said a weaker USD and a sharp decline in both nominal and real US Treasury yields are clearly supporting gold. He added that demand for protection against a potentially more unpredictable and confrontational Trump administration looks to be providing a compelling backdrop for gold buyers.
Global stocks slumped and the dollar softened as Democrats scored a decisive win in the US midterm elections. A softer dollar makes greenback-priced bullion more affordable for buyers overseas.
Fed rate bets and the $4,000 level
Traders see a 79% chance that the Fed will raise rates in December, according to CME's FedWatch tool. Higher interest rates increase the opportunity cost of holding non-yielding bullion, reducing its appeal to investors.
Markets now await the US non-farm payrolls report due on Friday. Meanwhile, Iran and the United States are still far from a deal to end their war, a senior Iranian official told Reuters on Tuesday.
According to Matt Simpson, senior market analyst at StoneX: "$4,000 is the obvious resistance level". He said a break on either side of that range could dictate gold's next decent move.
Among other metals, spot silver gained 3.8% to $51.67, platinum rose 2.8% to $1,455.71 and palladium climbed 3.8% to $969.49.
Source: Investing.com
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