Gold rises as dollar weakens ahead of US midterm election results

Gold prices rose on Wednesday as the US dollar weakened ahead of the US midterm elections, while investors awaited the non-farm payrolls data for insights into the Federal Reserve's policy direction. Spot gold increased by 0.1% to $3,931.24 per ounce by 0306 GMT, and US gold futures for December delivery stabilized at $3,941.40.

A weaker US dollar and falling US Treasury yields, both nominal and real, supported gold prices. Chris Weston, head of research at Pepperstone, noted that the demand for protection against a potentially more unpredictable and confrontational Trump administration also contributed to the gold buying interest. US stock futures declined, Treasuries surged, and the dollar weakened due to Democrats' early Senate victories, raising hopes they could take control of the chamber from President Donald Trump's Republican party.

However, the final result remained uncertain. Geopolitical tensions between Iran and the United States continued, with no deal in sight to end their conflict, despite US President Trump's reluctance to resume combat operations post-elections. Traders currently estimate a 78% probability of the Federal Reserve raising interest rates in December, suggesting that holding non-yielding bullion becomes less attractive due to higher interest rates.

The obvious resistance level for gold stands at $4,000, and a break from this range could determine its future direction. India's gold demand is projected to decline to a six-year low in 2026 as higher prices impact jewelry sales and investment demand moderates, according to the World Gold Council. Spot silver decreased by 1.3% to $49.12 per ounce, platinum fell by 1.9% to $1,389.54, and palladium dropped by 0.6% to $928.23.