Precious metals staged their sharpest rally in weeks early Wednesday after Democrats captured both chambers of Congress, knocking the dollar to a one-month low and reversing a punishing month-long slide in gold and silver.
Metals Reclaim Lost Ground
Spot gold rose 2.2% to $4,016.01 an ounce in the European morning, according to Reuters, with December COMEX futures up a matching 2.2% to $4,026.90. The move accelerated into the U.S. pre-market: Yahoo Finance quoted December futures at $4,052.40 by 7:09 a.m. ET, after the contract opened at $3,940.80.
Silver moved harder. December futures opened at $49.83 an ounce and were trading at $51.82 by 7:26 a.m. ET, while spot silver jumped 4.32% to $51.9235. Platinum gained 3.43% to $1,464.60, and Trading Economics quoted palladium at $993.50, up 6.43% on the day.
The rebound only partially repairs recent damage. Gold remains down 3.3% over the past week and 6.3% over the past month, and is 1.8% below where it traded a year ago. Silver is still off 7.6% on the week and 19% on the month.
A Weaker Dollar Does the Work
The proximate driver was currency. The U.S. dollar index fell roughly 0.6% to 101.27, its weakest level in about a month, and Treasury yields eased, with the 10-year note near 4.94%. A softer dollar makes bullion cheaper for overseas buyers, and lower yields reduce the opportunity cost of holding an asset that pays no income.
Democrats decisively won control of the Senate, taking a 54-44 edge by flipping seven seats, and cleared the 218 seats needed in the House. The Associated Press tally had Democrats at 228 House seats won with leads in 34 more — a result that could push the party past 260 seats, its strongest showing since 1990. Minority Leader Hakeem Jeffries is expected to become speaker in January.
Analysts See a Ceiling
Not everyone expects the rally to extend. "The Democrat sweep in the US midterm elections appears to have boosted gold prices as investors become more worried about the fiscal outlook," said Hamad Hussain, senior climate and commodities economist at Capital Economics. But he cautioned that "the fact that the Fed is likely to remain hawkish due to the inflationary backdrop means that the scope for further gains in gold prices is limited."
That hawkish backdrop firmed up Wednesday morning. ADP reported private-sector employment rose by 86,000 in October, slightly ahead of expectations, with base pay up 3.2% and gross pay up 4.7% year over year. Professional and business services shed 27,000 jobs, a third straight monthly decline. The September figure was revised down to 86,000 from 90,000.
The Fed held its target range at 3.75%-4.00% in October over two dissents from policymakers who wanted a quarter-point increase. CME FedWatch readings for a December hike clustered between 79% and 81% through Wednesday morning, though the gauge moves continuously and quoted figures varied by snapshot.
Demand Data Cuts Both Ways
The World Gold Council's third-quarter report, released Tuesday, showed central banks adding an estimated 321 tonnes, up 42% year over year and the fastest pace since late 2024, bringing the year-to-date total to 675 tonnes. The People's Bank of China led reported buying at 63 tonnes, followed by Poland at 40 tonnes. Gold ETFs took in 211 tonnes, lifting holdings to a record 4,256 tonnes.
Consumers went the other way. Jewellery demand fell 17% to roughly 310 tonnes, the weakest third quarter in the council's series, with China down 22% and India down 20%. Total demand slipped 1% to 1,369 tonnes.
Equities set up for a firmer open after an overnight selloff reversed. Tuesday's close had the S&P 500 up 0.36% at 7,568.92, the Nasdaq Composite up 0.83% at 25,372.01 and the Dow down 0.38% at 51,786.72.
Sources: Reuters (via MarketScreener and Investing.com), ADP Research National Employment Report, World Gold Council Q3 2026 Gold Demand Trends, Yahoo Finance, CNBC, CBS News, Associated Press, Capital Economics, Trading Economics, FXLeaders