Gold rebounds as the US Dollar slides and midterm results weigh on yields

Market comment on behalf of Wael Makarem Financial Markets Strategists Lead at Exness

Gold climbed on Wednesday, recovering from its yearly low as the dollar fell to a one-month low. The move followed a Democratic sweep in the US midterm elections and the potential for a gridlocked government and reduced odds of major new spending. Treasury yields eased in response, lowering the opportunity cost of holding non-yielding bullion.

Lower oil prices provided further support, mitigating inflationary pressures and softening monetary policy expectations. Progress toward a diplomatic solution in the Middle East could push crude prices lower and reduce pressure on gold. However, markets continue to price in an interest rate hike in December and another in 2027, which could cap the metal’s gains.

Looking ahead, attention turns to today’s ISM Services PMI and Friday’s non-farm payrolls report that investors will monitor to gauge the potential for additional interest rate hikes. Stronger-than-expected data could push yields back up and weigh on the metal, while a credible diplomatic settlement that drives oil lower would ease pressure and let underlying demand fuel a recovery.

Zaid Barem / ymm