Gold climbs above $4,100 to a two-week high as the dollar and yields fall after the midterms

Gold hit a two-week high as the dollar, yields and oil fell after the US midterm elections². The metal reached its highest level in more than two weeks as the dollar and yields weakened¹.

Prices surged past $4,100 and silver neared $53 as precious metals extended their rally following the election results⁴. Gold rallied above $4100 as the Nasdaq 100 crashed and bets on a December rate hike faded³.

The move then lost some momentum later in the session. Gold eased on inflation worries stemming from higher oil prices, with the US payrolls report in focus⁵. Investors were awaiting the non-farm payrolls report, due at 1330 GMT, for cues on the central bank’s path^2,5.

Why it matters to investors

The rally is tied to rates. Falling yields and a weaker dollar supported gold^1,2, and fading bets on a December hike added to the move³. Cleveland Fed President Beth Hammack said she favors a gradual approach to rate increases and that the Fed still has more work to do³.

Not every reading of the market is bullish, and the commentary on gold shows a clear split. One market commentary noted that gold broke below $4,000 and is down about 30% from its late January highs⁶. It said real yields have fallen sharply as the 10-year Treasury yield dropped from 5.35% in early October to below 4.9%, yet the metal still could not rally⁶.

Official buying is another support. Poland’s central bank has reached its previously stated target for gold reserves of 700 metric tons, leaving the door open to further action¹. Central bank demand of that kind sits alongside the market forces of yields and the dollar that drove the latest move^1,2.

What to watch

The payrolls report is the immediate test, since investors were looking to it for cues on the central bank’s trajectory^2,5.

Oil is a second. Higher crude prices revived inflation concerns and weighed on gold⁵, while the earlier decline in oil had accompanied the rally².

The third is the political outlook. A market strategist has examined how the split in Washington after the election could affect the metals rally⁴. Whether gold holds above $4,100⁴ or slips back toward the $4,000 level that one commentary flagged⁶ will show how durable the post-election move is³.