Gold rises 3% following Democratic dominance in Congress
Gold prices rose 3% after Democrats won control of the US Congress and the dollar weakened, amid anticipation of jobs data and Federal Reserve stances.
Translated by Qiyas from الراي — Original source
Gold prices rose three percent on Wednesday, as demand for the yellow metal increased due to the dollar’s decline following significant Democratic victories in the U.S. midterm elections, while investors awaited U.S. jobs data to be released this week in search of clues about the trajectory of U.S. monetary policy.
Spot gold prices climbed three percent to $4,046.91 per ounce by 09:28 GMT, and U.S. December gold futures also rose three percent to $4,057.20.
Hamad Hussein, an analyst at Capital Economics, said, “The Democratic Party’s landslide victory in the U.S. midterm elections appears to have boosted gold prices, as investors have become more concerned about fiscal outlooks.”
The dollar fell on Wednesday after Democrats secured a decisive win in the U.S. midterm elections. A weaker dollar enhances the appeal of dollar-priced gold and makes it less expensive for buyers holding other currencies.
Hussein added, “However, the fact that the Federal Reserve is likely to maintain tight monetary policy amid inflation means that the scope for further gold price gains is limited. At the same time, given that gold’s correlation with equities has become increasingly positive, continued weakness in technology stocks could also negatively impact gold prices.”
According to the CME Group’s FedWatch Tool, traders currently see an 83 percent probability that the Federal Reserve will raise interest rates in December. Higher interest rates increase the opportunity cost of holding gold, which yields no return.
On the geopolitical front, a senior Iranian official told Reuters on Tuesday that Iran and the United States remain far from reaching an agreement to end their conflict, as Trump refused to rule out resuming U.S. military operations after the elections.
Markets are now awaiting the U.S. non-farm payrolls report, scheduled for release on Friday.
In other precious metals, spot silver rose 4.4 percent to $51.99 per ounce, platinum climbed 3.2 percent to $1,461.58, and palladium increased 5.6 percent to $985.64.
