Gold prices surged nearly 2% on Thursday, reaching a two-week high as the U.S. dollar weakened and Treasury yields dropped following the Democratic midterm election wave. Spot gold climbed 1.9% to $4,134.83 per ounce, marking its highest level since October 22. The rally followed a 3.4% gain on Wednesday, the largest daily increase since August 19.
Analysts attributed the rise to a weaker dollar and lower Treasury yields, which helped gold recover above the key $4,000 level. Linh Tran, a market analyst at XS.com, noted that sustained investment flows and yield movements could stabilize gold above $4,000, potentially paving the way for a recovery toward $4,200 and $4,400.
The dollar edged lower after Democrats secured a significant victory in the U.S. midterm elections, reducing market uncertainty and boosting global equities. A weaker dollar makes gold more affordable for international buyers. Meanwhile, the yield on 10-year U.S. Treasuries fell 6 basis points overnight and another basis point in early Tokyo trade to 4.87%.
Market participants are now awaiting the U.S. nonfarm payrolls report on Friday to assess the Federal Reserve's monetary policy outlook. Traders currently see an 82% chance of a December rate hike, which could reduce gold's appeal due to its non-yielding nature. Citi has set a 0-3 month price target of $4,500 per ounce for gold, citing potential upside if geopolitical tensions ease.
Other precious metals also saw gains, with spot silver rising 1.7% to $53.12 per ounce, platinum gaining 2.1% to $1,527.65, and palladium climbing 2.6% to $1,030.14.