Gold Prices Soar 5% Overnight to Two-Week High Following Democratic Win in US Midterm Elections

Gold prices have shot up 5% overnight to two-week high from yesterday’s low point around $3,900. The sharp spike in gold comes as dollar, Treasury yields ease after the decisive win by the Democrats in the US midterm elections. Spot gold prices surged above $4,100 per ounce, hitting its highest since October 22. Bullion climbed about 3.4% on Wednesday, its biggest daily gain since August 19. In the Indian markets too, the MCX Gold prices have surged 1.5% to above Rs 1.45 lakh per 10 gm. A weaker dollar and lower ​Treasury yields ​have helped gold recover above the key $4,000 ⁠level, though holding above that threshold remains crucial for the recovery outlook. Ponmudi R, CEO of Enrich Money, pointed out that “Bullion gained as much as 3.6%, marking its strongest advance since mid-August, while easing crude oil prices helped temper inflation concerns. US payrolls data due Friday will be the next important trigger for interest-rate expectations. The near-term bias remains positive, provided prices sustain above the $4,070–4,100 support zone. A breach below this range could trigger a corrective move towards $3,970–4,000. There are 3 key factors driving gold prices in today’s trade – One of the key reasons why the gold prices are shooting is the weakness in the dollar. The dollar edged lower on Thursday in the aftermath of an overwhelming victory by Democrats in US midterm elections that cleared a major source of uncertainty and ⁠fuelled a rally ⁠in global equities. A weaker dollar makes greenback-priced bullion more affordable for holders of other currencies. The yield on benchmark ⁠ 10-year US Treasuries ‌ was down 6 basis points overnight and by a ​further basis point in early Tokyo trade to ‌4.87%. One of the key reasons driving the gains and the sentiment in the gold market is the US Midterms results. Popularly referred to as the Blue Tsunami, Democrats have outperformed expectations, and appear on track to secure strong majorities in both the House and Senate. According to Nomura, “Democratic control would constrain President Trump’s legislative agenda, raising the likelihood of gridlock. Senate control could complicate key appointments, including to the Fed.The Democratic victory in Texas raises important risk for AI investment.” The Japanese brokerage house pointed out that “the strong Democratic performance is likely to improve the party’s prospects for unified government in 2028, posing downside risks to the medium-term fiscal outlook. “ The gold market investors are also awaiting the US nonfarm payrolls report on Friday to further gauge the Federal Reserve’s monetary policy outlook. As of now, recent surveys and market buzz indicates that traders believe that there is an 82% ​chance of the raising rates in December. Higher interest rates increase the opportunity cost of holding non-yielding ​bullion, reducing its appeal to investors.