Gold Punches Past $4,100 as Democratic Sweep Sinks the Dollar

Gold isn't done flexing. Spot bullion climbed 1.8% on Thursday to $4,132.36 an ounce, holding comfortably above the $4,100 mark, while U.S. gold futures added 1.7% to reach $4,141.40. The rally came as a Democratic sweep in the U.S. midterm elections jolted currency and bond markets, per Investing.com.

The election result handed the Trump administration a setback and set off a broad retreat in U.S. bond yields and the dollar. Treasury yields slid across maturities on Wednesday and kept falling Thursday, and the greenback weakened further after dropping 0.4% in the prior session. The dollar index was last down 0.3%, at 101.31. That combination is rocket fuel for gold, which pays no interest and gets cheaper for overseas buyers when the dollar softens.

The rest of the metals complex rode along. Silver jumped 2.1%, to $53.34 an ounce, while platinum advanced 1.7%, to $1,525.78. Spot palladium gained 1.7%, to $1,024.51, and palladium futures picked up 1.6%, to $1,020.25.

ANZ analysts told Investing.com that bonds also caught a bid on expectations the new political balance in Washington will constrain Trump's proposed tax cuts and spending plans. But they flagged a catch: government borrowing has been a major pillar of gold's support over the past year, so tighter fiscal expansion could chip away at one of the forces behind bullion's longer-term appeal.

Oil stayed sharply lower after slipping below $100 a barrel on Wednesday for the first time since early October. Trump downplayed the prospect of renewed military strikes against Iran after the election losses, cooling fears of further escalation and energy supply shocks. Gold has now notched its strongest break yet from a months-long slump, though it still sits more than 20% below where it traded before the U.S.-Iran war erupted in late February — a conflict that drove energy costs and inflation higher, pushing tighter monetary policy that weighed on non-yielding metal.

Next up: Friday's U.S. nonfarm payrolls report, which investors will comb for clues on the economy and the rate path. Any sign that inflation is cooling could hand the Federal Reserve more room to ease, a scenario that would give gold yet another push.