Gold hits 2-week high as dollar, oil, yields fall after U.S. midterms

Gold prices extended ​their post-US midterm election rally to a more than two-week high on Thursday, as the US dollar and Treasury yields weakened, while a sharp drop in oil prices eased ⁠inflation ‌concerns.

Spot gold gained 1.7% to $4,130.27 per ounce ⁠after hitting a session high of $4,146.63 per ounce, a level last seen on October 20.

Gold jumped nearly 3.4% on Wednesday, its sharpest daily rise since August 19, with prices ‌up over $250 this week from a one-year low of $3,869.85 hit on Friday.

US gold futures for December delivery climbed 1.6% to $4,139.60 per ounce.

“Precious ​metals have emerged as major winners following the US elections,” said Ole Hansen, head of commodity strategy at Saxo Bank.

“The powerful combination of falling energy prices, easing inflation and interest rate concerns, and declining ⁠Treasury yields and the dollar has forced recently established speculative shorts to cover,” Hansen added.

Brent oil ‌was below $100 a barrel after diving nearly 9% ‌on Wednesday on hopes that major Democratic gains in the elections could reduce the risk of further escalation in the Iran war. The US dollar and Treasury yields were at ⁠multi-week lows.

Lower energy prices help ease inflation concerns and reduce expectations of ⁠higher-for-longer interest rates, while a weaker dollar makes dollar-denominated gold ⁠less expensive for buyers holding other currencies, supporting demand for the precious metal.

Investors are also awaiting Friday’s US non-farm payrolls report for further ​cues on the central bank’s trajectory.

Meanwhile, ‌the Bank of England is widely expected to raise interest rates for the first time in three years on Thursday, taking a path already embarked on by all its main peers.