Gold rises above $4,100 as U.S. dollar weakens after midterms

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Gold rises above $4,100

Highlights

Spot gold climbed 1.61% to $4,126.87 an ounce.
Falling Treasury yields and a weaker dollar supported bullion.
Friday's U.S. jobs report could influence the next move.

Spot gold rose 1.61% to $4,126.87, while December 2026 gold futures gained 1.55% to $4,136.26, according to the latest market readings. According to Bloomberg, falling oil prices also supported gold by easing inflation concerns and reducing expectations of further Federal Reserve interest rate hikes.

Democratic victory pressures dollar and Treasury yields

The Democratic Party's victory in both chambers of Congress has raised expectations of greater constraints on President Donald Trump's tax and spending agenda. Investors responded by reducing exposure to the dollar and U.S. government bond yields.

The U.S. Dollar Index declined 0.24% on Thursday. Treasury yields also continued falling, improving conditions for precious metals. Gold generally benefits from lower yields because it does not generate interest income. A weaker dollar also makes bullion less expensive for international buyers, potentially supporting demand.

However, the market reaction largely reflects expectations rather than enacted policy changes. The direction of U.S. fiscal policy remains uncertain despite the election results.

Falling oil prices ease inflation concerns

Lower energy prices have provided another source of support for gold. Brent crude futures extended their decline after falling below $100 a barrel on Wednesday for the first time since early October.

The retreat followed Trump's comments playing down the possibility of further U.S. strikes against Iran. Reduced expectations of military escalation helped ease concerns about oil supply disruptions.

Cheaper oil could eventually moderate inflation pressures and reduce expectations of additional Federal Reserve tightening. Such a shift would remove an important obstacle to gold's recovery.

Despite the recent rally, bullion remains more than 20% below its level when the U.S.-Iran conflict began in late February. Higher energy costs and tighter monetary policy have weighed on prices for months.

U.S. jobs data could determine the next move

Investors are now awaiting Friday's U.S. employment report for fresh evidence about economic conditions and the Federal Reserve's policy outlook.

Weaker employment figures could reinforce expectations of lower interest rates. Stronger data, however, might support Treasury yields and limit further gains in bullion.

Gold's recovery therefore faces an important test. Sustained gains may depend on whether falling yields and easing inflation pressures continue beyond the immediate election reaction.

We also reported Bitcoin tops $80,500 as U.S. stocks rally after midterm elections.

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