On November 4, international gold prices continued to rebound, with spot gold surging in short-term trading and just reclaiming the $4,000 per ounce level.
The weaker dollar provided support for gold, while investors continued to monitor progress in U.S.-Iran diplomatic negotiations and the results of the U.S. midterm elections.
Earlier market action showed spot gold rising about 1.7%, U.S. gold futures gaining more than 2%, and the dollar index falling 0.4% to 101.50.
Other precious metals rose in tandem, with spot silver up more than 2%, while platinum and palladium also advanced.
Previously, gold had fallen nearly 7% cumulatively in October, briefly breaking below the $4,000 threshold at month-end.
The following are market updates:
Dollar Index Falls 0.4%, Gold Extends Rebound
A weaker dollar became an important factor driving this round of gold price recovery.
As the dollar index dropped to 101.50, dollar-denominated gold became cheaper for holders of other currencies, boosting gold buying.
Previously, international gold prices had fallen nearly 7% cumulatively in October, mainly due to rising inflation and interest rate hike expectations triggered by the U.S.-Iran conflict, as well as investors selling gold to replenish liquidity during the tech stock selloff.
Entering November, as the market reassessed the monetary policy outlook, gold gradually recovered its earlier losses.
U.S.-Iran Diplomatic Talks Continue, Energy Prices and Inflation Outlook Remain Uncertain
Regarding the Middle East situation, the United States and Iran are evaluating a new proposal put forward by mediators in an attempt to resolve their differences and avoid a full-scale escalation of conflict.
Previously, U.S. forces carried out limited military strikes on Iran's Qeshm Island in the Strait of Hormuz, which briefly pushed international oil prices higher.
However, as the U.S. government signaled willingness to give diplomatic negotiations more time, international oil prices saw a notable pullback this week.
On Tuesday, crude oil prices fluctuated within a range of about $5 per barrel, reflecting that market expectations regarding military conflict and diplomatic progress continue to adjust back and forth.
The nine-month U.S.-Iran conflict has pushed up global energy prices, intensified inflation pressures, and prompted the market to raise expectations for further central bank monetary tightening.
The recent pullback in oil prices has temporarily eased this pressure, but the Middle East military situation could still cause energy prices to fluctuate again.
Democrats Sweep Both Congressional Chambers in U.S. Midterm Elections, Falling Dollar and Treasury Yields Support Gold
The U.S. midterm elections on November 3 produced a major political landscape shift.
The Democratic Party has won a majority in the Senate and has been projected by multiple U.S. media outlets to seize control of the House of Representatives, ending the situation where Republicans controlled both the White House and both chambers of Congress.
Democrats achieved victories in key Senate races in Texas, Ohio, North Carolina, and South Carolina, performing beyond previous market expectations.
The election results could have a significant impact on the Trump administration's economic policies over the next two years.
With congressional control shifting to the Democrats, it will become noticeably more difficult for Trump to further advance large-scale tax cuts, fiscal expansion, and deregulation policies.
Democrats may also strengthen regulatory scrutiny of government spending, the AI industry, and large technology companies.
However, disagreements between the two parties on issues such as the budget, fiscal appropriations, and the debt ceiling could also increase uncertainty in future policy negotiations.
In financial markets, the prospect of a major Democratic victory prompted investors to lower expectations for further U.S. fiscal stimulus, weighing on U.S. stock futures, with capital flowing into U.S. Treasuries, pushing Treasury yields lower and weakening the dollar in tandem.
For gold, dollar depreciation and declining real Treasury yields both help reduce the opportunity cost of holding gold, constituting a short-term positive.
Additionally, policy uncertainty brought about by changes in the congressional power structure could further increase safe-haven demand for gold.
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