Gold prices (XAU/USD) hovered around US$4,130 per troy ounce during Asian trading on Thursday (November 5), following a brief touch of a two-week high. Gold has managed to sustain its gains for the second consecutive day.
The strengthening of gold has been supported by a weakening US dollar in the wake of the United States midterm elections. The dollar fell to its lowest level since late September, helping to maintain positive momentum for gold.
A significant victory for the Democratic Party has also eased concerns regarding the ongoing US-Iran conflict. Hopes for a de-escalation in geopolitical tensions have weighed on oil prices and helped alleviate inflationary fears.
Furthermore, the potential for political gridlock in Washington is expected to limit government spending. This situation has put downward pressure on US bond yields, further weighing on the dollar.
However, gold’s gains remain capped by expectations that the Federal Reserve will raise interest rates in December. ADP data, which showed an addition of 86,000 private-sector jobs, has further reinforced these expectations.
Market participants are now awaiting the US Nonfarm Payrolls (NFP) report on Friday. This data is expected to serve as a key catalyst for the US dollar and will likely determine the future direction of gold prices. (srh)