Gold prices climbed nearly 2 percent to a two-week high on Thursday, supported by a weaker US dollar and lower US Treasury yields in the wake of the Democratic midterm election wave, Reuters reported. Spot gold rose 1.9 percent to $4,134.83 an ounce by 0316 GMT, hitting its highest level since October 22.

Source: Reuters

Bloomberg put the same morning's peak slightly higher: bullion rose as much as 2.1 percent to trade near $4,146 an ounce, with spot gold at $4,139.29 an ounce at 12:18 p.m. in Singapore. The move extended Wednesday's jump of more than 3 percent — the biggest rise since August — which carried gold back above the $4,000 threshold. Silver was 1.7 percent higher at $53.11 an ounce after jumping almost 5 percent on Wednesday, and platinum and palladium also advanced, Bloomberg reported.

Source: Bloomberg

Why a US election moved a metal

Treasury yields and the dollar extended declines on Thursday as the election result fuelled expectations that the Trump administration's tax and spending plans may be contained, Bloomberg reported. Lower yields tend to support gold because it pays no interest, while a weaker dollar makes the precious metal cheaper for buyers in other currencies. The Bloomberg Dollar Spot Index was down 0.2 percent on Thursday after falling 0.4 percent in the previous session. Yaani, in plain terms: at Thursday's spot rate, 10 grams of gold works out to about $1,329 (arithmetic from the ounce price) — before any local premium, duty or making charges in India or elsewhere.

Source: Bloomberg

"Expectations-driven, not yet policy"

"For now, much of the market reaction remains expectations-driven rather than reflecting concrete policy changes," said Christopher Wong, a strategist at Oversea-Chinese Banking Corp, quoted by Bloomberg. "Lower oil prices, if sustained, should also help contain inflation expectations and temper hawkish Fed pricing, reducing a key headwind," Wong said. "We remain cautiously optimistic that gold could be finding a floor, although a more sustained recovery would likely require further moderation in Fed tightening expectations and continued declines in real yields."

A rebound inside a bigger slump

Bloomberg noted the rebound is gold's biggest break yet out of a months-long slump — but bullion is still down by more than a fifth since the US-Iran war erupted in late February, as the resulting spike in energy prices spurred tighter monetary policy around the world. Brent crude extended its own sharp decline on Thursday after dropping below $100 a barrel on Wednesday for the first time since early October, as President Donald Trump played down the prospect of Iran strikes after the election rout, Bloomberg reported.

What happens next

Traders will be looking to the US payrolls report due Friday for more clues on the direction of the economy and interest rates, Bloomberg and Reuters reported. Signs that inflation is contained would give the Federal Reserve more room to pursue easing monetary policy — the shift Wong said a sustained gold recovery needs. For buyers in Punjab and the diaspora, the immediate question is whether Thursday's break above $4,100 holds through the payrolls data, or whether the two-week high proves to be another false dawn in a metal that is still more than 20 percent below its pre-war levels.