Gold rallies as dollar, Treasury yields soften after US midterm results

Gold climbed to its highest level in over two weeks on Thursday as the fallout from the US midterm election results rippled through the global financial and oil markets. Spot gold rose 1.6% to $4,124.89 per ounce by 0752 GMT. It touched $4,146.63 per ounce, its highest level since October 20, earlier in the session. Bullion climbed about 3.4% on Wednesday, its biggest daily gain since August 19. US gold futures for December delivery climbed 1.5% to $4,135.40. A weaker dollar and lower Treasury yields have helped gold recover above the key $4,000 level, though holding above that threshold remains crucial for the recovery outlook, said Linh Tran, market analyst at XS.com. "If investment flows and yield movements continue to provide support, gold could stabilise above $4,000, also opening up an opportunity for a recovery toward $4,200, followed by $4,400." Oil prices were slightly higher after earlier falling for a fourth day on expectations that the losses US President Donald Trump's Republican Party suffered in congressional elections this week may reduce the risk of further escalation of the US-Israeli war with Iran. Lower energy prices ease inflationary pressures, reducing expectations that the central bank will keep interest rates higher for longer, supporting the appeal of non-yielding bullion. The dollar slid to its lowest in more than a month, and 10-year US Treasury yield fell to its lowest since September 10. A weaker dollar makes greenback-priced bullion more affordable for holders of other currencies. Market participants now await the US non-farm payrolls report on Friday to further gauge the Federal Reserve's monetary policy outlook. Meanwhile, Citi has a 0-3 month price target of $4,500 per ounce for gold, the brokerage said on Wednesday, as it sees substantial upside potential if the Strait of Hormuz reopens and the Yemen/Saudi conflict de-escalates. Among other metals, spot silver rose 0.8% to $52.63 per ounce, platinum gained 1.2% to $1,514.20 and palladium climbed 2.2% to $1,026.83.