Gold Climbs on Softer Dollar, Falling Treasury Yields After U.S. Midterms — Update

By Giulia Petroni

Gold prices extended gains on Wednesday, jumping back above $4,000 a troy ounce on a softer U.S. dollar and falling Treasury yields after Democrats swept the U.S. midterm elections.

In midmorning trade in Europe, gold futures climbed 2.8% to $4,052.50 a troy ounce. Other precious metals followed suit, with silver futures gaining 4.7% to $52.11 an ounce and platinum up 2.4% to $1,464.10 an ounce.

Democrats won control of both chambers of the U.S. Congress in Tuesday's midterm elections, flipping Republican-held seats in several states. The results could introduce additional constraints on President Trump's agenda and reduce the likelihood of deficit-expanding legislation, according to analysts.

"Gold rallied amid expectations that a Democrat-controlled Congress could constrain Trump's fiscal agenda and limit further, increasingly unaffordable fiscal expansion," said Ole Hansen, head of commodity strategy at Saxo Bank.

The U.S. dollar index--which measures the greenback against a basket of other major currencies--fell 0.5% to 101.31, making dollar-denominated bullion more ​affordable for overseas buyers.

The prospect of further U.S. military action against Iran remains a key source of uncertainty for markets, with investors watching for signs of whether the Trump administration will return to the negotiating table or escalate its military campaign after the midterm elections.

Before the war began in late February, gold was trading above $5,000 an ounce. It dropped below the $4,000-an-ounce mark in late October, as soaring energy costs linked to the conflict raised expectations of further interest-rate hikes this year.

The focus is set to remain on the Federal Reserve's monetary policy path and rising debt levels.

"Tax reductions, additional fiscal stimulus and deregulation are now less likely, while investors are also concerned about increased scrutiny regarding artificial intelligence, data-center development, banks and cryptocurrencies," analysts at brokerage XM said. "This could lead to slower growth, but also fewer concerns about inflation spiraling out of control and the need for further Fed rate hikes."

Still, traders are currently pricing in a nearly 83% probability of a Federal Reserve rate increase in December, according to CME's FedWatch tool. Higher interest rates raise the opportunity cost of holding non-yielding assets such as gold, reducing their appeal to investors.

Markets now await the release of the U.S. nonfarm payrolls report due on Friday for fresh cues on the Fed's policy outlook.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

November 04, 2026 05:43 ET (10:43 GMT)