Gold Reclaims $4,000, Rises 3.4% After Congressional Elections
Key Facts
Gold reclaimed $4,000 an ounce on November 4, as prices surged after the U.S. midterm elections shifted control of both chambers of Congress to Democrats. Spot gold rose 3.4% to $4,059.95 an ounce at 2:04 p.m. Eastern time, while December futures settled 3.4% higher at $4,073. Reuters described the gains as the biggest since mid-August, noting that the dollar fell after the Democratic victory. The move reflects markets’ response to the changing political landscape and the weaker U.S. currency, rather than an outcome that can be attributed to the elections alone. The rebound came after gold hit a low of $3,869.85 on October 30, its lowest level since October 2025.
The rally extended into the following session, with spot gold reaching $4,146.63 an ounce on November 5, its highest level since October 20. It then traded at $4,100.27, up 1% at 2:05 p.m. Eastern time, after a gain of nearly 3.4% the previous day. EL7 data show gold settled at $4,073 on November 4, compared with a close of $3,940.4 on November 3. On November 5, it settled at $4,113.5. These moves put the recovery above $4,000 in the context of a rebound spanning two sessions, after a late-October decline.
The weaker dollar was one of the immediate factors supporting the metal, as its decline made gold priced in the U.S. currency less expensive for holders of other currencies. On November 5, the dollar approached its lowest level since September 30, while the yield on the 10-year U.S. Treasury fell to its lowest level in about two months. Gold market analyst Jim Wyckoff said the possibility that Congress could struggle to pass much legislation might be negative for the U.S. economy, potentially allowing the Federal Reserve to move toward easier monetary policy. Wyckoff said, "A U.S. Congress that is likely to see gridlock on much legislation could be somewhat negative for the U.S. economy, which could allow the Fed to pursue a more accommodative monetary policy." This remains the analyst’s interpretation of the market move and its potential implications.
The Associated Press said Democrats unseated Republicans in both the House and Senate and would take the majority when the new Congress begins work on January 3, 2027. The agency said the victory would reshape the final two years of President Donald Trump’s term and constrain his legislative agenda. Democratic leaders also said they intended to use their new majority to investigate senior administration officials and conduct closer scrutiny of Trump’s and his family’s wealth. The results provided a political backdrop for market moves, while Reuters linked the Democratic victory to the dollar’s decline and gold’s rise. Price action alone does not prove that the elections were the only factor behind the increase.
By contrast, U.S. labor market data showed initial jobless claims fell 6,000 to 189,000 in the week ended October 31, versus economists’ expectations of 196,000 in a Reuters poll. The agency said the reading matched the mid-July level, which was the lowest since 1969, and that claims had mostly remained below 200,000 since mid-September. The Associated Press reported that claims fell from 195,000 the previous week and were the lowest since mid-July. Reuters attributed the decline in layoffs to strong domestic demand and earnings growth, but also quoted some economists who said fewer claims could reflect a shrinking labor force. The reading offers markets a mixed signal: it points to fewer layoffs, while labor market strength may affect monetary policy expectations.
On November 5, Reuters reported that traders saw a 66% probability of the Federal Reserve raising interest rates in December, according to CME’s FedWatch tool. Investors were looking to Friday’s nonfarm payrolls report for further clues about the policy outlook. Metals trading director David Meger also said falling energy prices could ease inflation concerns and reduce the potential need for a later rate increase. He added, "Weak energy prices could alleviate some inflation concerns and reduce the potential need for future rate increases." Gold trading therefore continued amid mixed signals from the labor market and financial markets, ahead of the eagerly awaited jobs data.