Gold heads for biggest daily gain since August as dollar weakens

By Anushree Mukherjee

Nov 4 (Reuters) - Gold surged about 3% on Wednesday, on track for its biggest daily gain since mid-August as the dollar tumbled after Democrats swept the US midterm elections, while investors looked to this week's US nonfarm payrolls report for clues on the interest rate outlook.

Spot gold was up 2.9% to $4,040.15 per ounce by 10:45 a.m. EST (1545 GMT), while US gold futures for December delivery rose 2.8% to $4,049.00.

Spot gold reclaimed the $4,000-an-ounce level after falling to $3,869.85 on October 30, the lowest level since October 2025.

A sweeping victory by Democrats in the US midterm elections sent the dollar to more than a one-month low on Wednesday, as investors weighed the prospect of tighter AI regulation and its potential drag on economic growth.

Democrats seized control of both the US Senate and House of Representatives, scoring wins in Republican strongholds for the first time in generations as tens of millions of voters delivered a scathing rebuke to President Donald Trump.

The weaker dollar boosted gold's appeal by making dollar-priced bullion less expensive for overseas buyers. USD/

Gold drew support from a weaker dollar, reflecting the view that a US Congress that is likely to be deadlocked on much legislation would probably be somewhat negative for the US economy, which could allow the Federal Reserve to lean into easier monetary policy, said Jim Wyckoff, a market analyst at American Gold Exchange.

Meanwhile, inflationary concerns persisted and oil prices remained elevated, with Brent crude trading above $100 a barrel as investors awaited Washington's next move in the US-Israeli war on Iran.

Traders currently see about an 83% chance that the Fed will raise rates in December, according to CME Group's FedWatch tool. Higher interest rates increase the opportunity cost of holding non-yielding gold.

US private payrolls growth increased in October, the ADP National Employment Report showed on Wednesday. Investors now await the release on Friday of the US nonfarm payrolls report for further clues on the monetary policy outlook. The US central bank kept rates unchanged in October.

"A strong print may corroborate existing market expectations for Fed hikes on the horizon. (The payrolls data) is unlikely to raise terminal rate expectations given labour markets are not currently a significant driver of the inflation outlook," said Daniel Ghali, head of metals research at Deutsche Bank.

Among other metals, spot silver gained 4.2% to $51.88, platinum rose 4.2% to $1,475.98, and palladium climbed 7.1% to $999.50.