Gold heads for biggest daily gain since August on weaker dollar

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 non-farm payrolls report for clues on the interest rate outlook.

Spot gold rose 2.9% to $4,041.60 per ounce by 0918 a.m. ET (1418 GMT), while US gold futures for December delivery rose 2.8% to $4,051.80.

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

A sweeping victory by Democrats in the US midterm elections sent the dollar to a more than 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 Senate and House, 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 Congress unable to pass much legislation and likely to be deadlocked would probably be a little negative for the US economy, which will allow the Federal Reserve to maybe lean easier on its 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 a 79% chance that the Federal Reserve will raise rates in December, according to CME's FedWatch tool. Higher interest rates increase the opportunity cost of holding non-yielding gold.

Investors are awaiting Friday's US non-farm payrolls report for further insight into the interest-rate outlook after the Federal Reserve kept rates unchanged in October.

"A strong print may corroborate existing market expectations for Fed hikes on the horizon, it 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 4.4% to $51.94, platinum rose 3.6% to $1,466.30 and palladium climbed 6.2% to $991.39.