Gold prices rise 3 per cent as US dollar weakens
Bullion demand increased after Democrats won the US midterm elections and investors awaited upcoming US payrolls data.
Gold prices increased by 3 per cent on Wednesday as the US dollar declined, according to the Economic Times. Spot gold reached $4,046.74 per ounce by 1234 GMT, heading towards its largest daily increase since August 19.
The price movement followed the Democratic Party's victory in the US midterm elections, where they took control of the Senate and House. Hamad Hussain, senior climate and commodities economist at Capital Economics, said the election results appeared to boost gold prices because investors are concerned about the fiscal outlook.
The US dollar fell on Wednesday as investors considered how tighter AI regulation might affect economic growth. A weaker dollar makes gold priced in dollars more affordable for those using other currencies, which supports demand.
Hussain noted that the Federal Reserve is likely to maintain a hawkish stance due to inflation, which may limit further gold gains. He also mentioned that gold's positive correlation with equities means weakness in technology stocks could impact prices.
Traders currently estimate an 82 per cent probability that the Federal Reserve will increase rates in December, according to the CME FedWatch tool. Investors are now looking toward the US non-farm payrolls report on Friday for more information on central bank policy.
Other precious metals also saw gains, with spot silver rising 4.8 per cent to $52.13 per ounce, platinum increasing 3.6 per cent to $1,467.60, and palladium climbing 6.5 per cent to $995.06.
