Gold prices continued their upward momentum on Thursday, reaching their highest level in more than two weeks. Spot gold climbed 1.6% to $4,125.82 per ounce, marking its strongest point since October 22, as the US dollar softened, Treasury yields fell, and oil prices declined.
Gold extends gains after US midterms
The latest rally followed a 3.4% surge on Wednesday, which marked gold’s largest single-day increase since August 19. This rebound arrived after several weeks of subdued performance in bullion markets.
Investor appetite for gold strengthened in the wake of the Democratic Party’s success in the US midterm elections. The party secured control of both the House of Representatives and the Senate, leading many analysts to anticipate increased legislative gridlock in Washington. This could complicate President Donald Trump’s fiscal agenda and limit prospects for further government spending.
As election results became clear, both the US dollar and Treasury yields dipped to multi-week lows, providing critical support for precious metals. A softer dollar typically makes gold more affordable for overseas buyers, while lower bond yields reduce the opportunity cost of holding gold, a non-yielding asset.
Ole Hansen, head of commodity strategy at Saxo Bank, stated that “the powerful combination of falling energy prices, easing inflation and interest rate concerns, and declining Treasury yields and the dollar has forced recently established speculative shorts to cover.”
Silver also benefited from the improving sentiment, rising over 1% to $52.84 an ounce.
| Metal | Thursday Price | Daily Change | Recent High |
|---|---|---|---|
| Gold | $4,125.82/oz | +1.6% | Highest since October 22 |
| Silver | $52.84/oz | +1% | Recent multi-week high |
Oil prices drop, easing inflation concerns
Falling oil prices have also contributed to gold’s recovery. Brent crude plunged more than 8% on Wednesday and stayed below $100 per barrel on Thursday, experiencing only a modest rebound.
Analysts linked the drop in energy prices to the Democratic gains in the midterm elections, which have fueled hopes for renewed diplomatic efforts regarding Iran. Previously, rising energy costs had heightened inflation fears and increased pressure on central banks to maintain tight monetary policy. The recent oil slide has eased some of these anxieties, offering additional support to gold prices.
Mini dictionary: Brent crude, a major global oil benchmark, is used to price more than half of the world’s internationally traded crude oil supplies. Its price trends often signal broader shifts in energy markets.
Bank of England raises rates as gold holds firm
In the United Kingdom, the Bank of England increased its benchmark interest rate by 0.25 percentage points to 4%. This marked the central bank’s first rate hike in over three years as it responded to higher energy costs stemming from Middle East tensions.
The Bank warned that UK inflation could reach around 5% by mid-2027. Despite this policy move, gold prices remained steady above $4,100.
Market participants are now awaiting the US nonfarm payrolls data due Friday, which may shape expectations for future monetary policy by the Federal Reserve. Strong jobs data could bolster the case for another Fed rate increase in December, potentially capping further gains for gold, while softer employment figures may lend additional support to bullion prices.
Strategists from OCBC noted cautious optimism for gold, stating that further advances would likely require a softening in Fed tightening expectations and a sustained recovery in investment demand.
