(Kitco News) – Gold prices staged a strong recovery during a volatile week, as an early rebound from last week's sharp selloff gained momentum following the Democratic sweep of Congress in Tuesday's midterm elections, before a technology-led equity rout and stronger-than-expected U.S. payrolls ate into the precious metal's gains.
Spot gold kicked off the week trading at $3,875.21 per ounce on Sunday evening, and the yellow metal quickly pushed higher on Monday as falling oil prices eased inflation concerns and bargain-hunting emerged following the previous week's decline. The recovery stalled Tuesday as stronger U.S. economic data, rising Treasury yields, and a firmer dollar weighed on bullion, with gold briefly retreating below $3,900 before buyers returned.
The rally then accelerated Tuesday evening and Wednesday after Democrats secured control of both chambers of Congress, raising expectations for legislative gridlock and potentially reduced government borrowing. Treasury yields and the dollar fell sharply as investors reassessed the fiscal outlook, helping gold surge back above $4,000. The advance continued Thursday, when spot prices set their weekly high at $4,147.02 per ounce, before a sharp technology-led equity selloff triggered renewed liquidation across financial markets.
Gold came under renewed pressure Friday after the October nonfarm payrolls report showed the U.S. economy added 165,000 jobs, substantially exceeding expectations, while unemployment declined to 4.1%. The stronger labor market data strengthened expectations for another Federal Reserve rate hike in December, pushing the dollar and short-term Treasury yields higher and driving gold prices toward $4,030 before the yellow metal staged a modest recovery to trade just shy of $4,070 heading into the weekly close.
The latest Kitco News Weekly Gold Survey showed Wall Street evenly distributed across the sentiment spectrum following gold’s solid weekly performance, while Main Street bulls were emboldened by gold’s post-election momentum.
“Gold seemed to act like a safe haven for most of last week,” said Marc Chandler, managing director at Bannockburn Global Forex. “It recovered from last Friday’s $3870 low basis the cash market and reached almost $4147 as US equities plunged on November 5. With the stronger-than-expected US employment data and the extension of oil’s recovery, gold dropped ahead of the weekend.”
“I am still not convinced the yellow metal has bottomed, and a break of $3975 would support my doubts,” Chandler added. “Below there, modest support may be seen near $3935.”
“Higher,” said Adam Button, head of currency strategy at investingLive. “The price action was good this week despite some intense volatility in equity markets. The seasonal tailwind for gold starts now.”
Adrian Day, president of Adrian Day Asset Management, said gold prices got ahead of themselves after the midterms, and he expects the yellow metal to decline next week.
“Gold ran up after the election for some solid reasons, but also in anticipation of an early end to the war with Iran (lower dollar and lower oil price leading to lower CPI expectations and relieving pressure on the Federal Reserve to raise rates),” he said. “I suspect this optimism is overdone, and we could see gold give back most of its rally over the past week.”
“This is short term, however,” Day added.
Kevin Grady, president of Phoenix Futures and Options, told Kitco News that the incoming Democratic Congress will have no choice but to embrace the AI buildout if they want the revenue to fund their spending priorities – and that spending will likely weaken the dollar and boost gold.
Grady said he was surprised to see the market’s initial reaction to the midterm results.
“Yesterday was the meltdown, and I was actually surprised at the rally the other day,” he said. “I think that just exacerbated the sell-off yesterday.”
He said the Democrats’ calls to stall data centers is shortsighted, and he expects them to walk back a lot of their stronger statements as the economic realities sink in.
“Today they're coming out and saying anything that's been permitted already will be able to continue and go forward,” he said. “That covers all of '27 to '28. They have a lot of policies that they're trying to enact; they have a lot of things they want to try to do. You can't do that without revenue. I think they're going to start realizing once they start crunching numbers, ‘Wait a minute, if we just stall this, we're not going to be getting the revenue on data centers.’ I think there's going to be agreements made, and middle ground made.”
Turning to Friday’s employment data, Grady said he sees more rate hikes on the way.
“I think you're going to see higher rates,” he said. “I think this [payrolls] number does solidify that, and I think they're going to try to find a level where they're comfortable with it. We'll look at what the CME FedWatch number is after today's data. But I think that another rate hike is coming, and I think that [Warsh] is trying to show that he's impartial.
Grady cautioned against leaning too hard on the day’s economic indicators, however. “I don't like looking at monthly data and making decisions on markets,” he said. “Like, ‘gold's going to move here, because of that number that came today.’ I just disagree with that logic. I think a lot of people tend to say, ‘Oh, this number today, it means this for gold.’ I totally disagree with it. I think it's more about the long-term trends.”
On Iran, Grady does think the midterms give Trump an opening to cut a deal – but it could also result in him digging in his heels against Democratic opposition.
“There's two sides here,” he said. “He could say right now, ‘Okay, we're just going to come to a deal.’ But I think that he has two years now to basically get this situation corrected. I think he's going to try to strangle Iran as much as he can.”
Grady believes that the agenda of the incoming Democratic Congress comes with a hefty price tag, and if enacted, those policies will weaken the dollar and boost gold.
“If you look at the price tag on a third of what they're talking about, it would crush the U.S. dollar,” he said. “Ultimately, I think that's a bullish thing for gold.”
“That's a long-term story, but I think those are the people that are investing in gold right now,” Grady added. “I think that gives gold a floor.”
This week, 13 analysts participated in the Kitco News Gold Survey, with Wall Street evenly split on gold’s near-term prospects following the election. Four experts, or 31%, expected to see gold prices gain ground during the week ahead, while five others, representing 38%, saw the yellow metal declining. The remaining four analysts, 31% of the total, said they couldn’t predict gold’s direction, or expected sideways trading next week.
Meanwhile, 212 votes were cast in Kitco’s online poll, with Main Street investor sentiment surging once again following gold’s post-midterm rally. 143 retail traders, or 68%, looked for gold prices to rise next week, while 32 others, or 15%, predicted the yellow metal would lose ground. The remaining 37 investors, representing 18% of the total, expected to see price consolidation during the week ahead.
Next week will feature few economic data releases, but the ones coming out are among the most closely watched by economists, traders, and policymakers, with a focus on price data.
The week begins with the Tuesday morning release of US CPI for October, with market participants anxious to see if consumer inflation is coming down.
Then Thursday morning will see the release of weekly jobless claims data, followed by existing home sales for October.
The week wraps up Friday morning with the publication of October’s PPI report.
John Weyer, co-director of commercial hedging at Walsh Trading, told Kitco News that while the results of the midterm elections were decisive, the future path of the dollar and gold still remains largely in the hands of the Federal Reserve and the President.
Weyer said that while the election removes some uncertainty from the market, it has no impact on the Federal Reserve, and precious metals traders will have to wait and see what the central bank does in December.
“The Fed operates differently than we do as participants in the markets,” he said. “They're slow and steady when it comes to data and seeing what happens, and patient. We want to make trades, so we want to play it one way or the other – what does this data mean, what does the election mean? – and I think they’re more inclined to stay on the path they were; they’re going to take in the latest data, the election, digest it as they will and just keep plodding along, boringly, day to day.”
“I think, after the last meeting, I won't say a majority, but a lot were looking for December action, and there were a few who were kicking it towards March of next year,” Weyer said. “Whatever the decision they're at, I don't think anything changed it one way or the other. If I was somebody who was thinking we were going to get [a hike] in December, I don't think this data changed it. I think they're just on their path.”
Weyer conceded that one thing the election could change is the outlook for the dollar – which would have clear implications for gold – but here again, Trump still holds many of the cards, particularly with trade and foreign policy.
“The executive branch hasn't changed,” he said. “When we talk about, let's say, the tariff front, which I think has a big effect on the dollar.” He said Trump could cut a face-saving deal with Iran, but he could also keep fighting for the next two years.
Weyer thinks there’s also a chance that Trump decides to go with the flow, and instead of exercising his presidential veto powers, he instead gets on board with some of the Democrats’ spending priorities over the next two years.
“One thing about the current president, he's predictably unpredictable,” he said. “If he feels the tide turning on perception, he might decide to go with the tide. He's done that before. I don't think there won’t be more spending. There'll be spending in different ways.”
Weyer still expects market participants will want to be in gold over the next two years, because nobody can be sure what the president will do.
“I think gold and silver of recent vintage are still a flight to quality,” he said. “They've also become a real speculator's market. The next two years, with somebody who can decide, ‘Hey, we're going after Greenland after all,’ there's still going to be reasons for being gold and silver. As long as he's there, I think they're going to be a safe-haven play because of what he may do next. There is a fundamental uncertainty with Trump in the White House.”
In the near term, Weyer believes the path of least resistance for gold is higher.
“I think [the $3,900 and $4,000 levels] are going to hold,” he said. “We were so much higher recently that these are going to become attractive levels for buyers, and people who have been forced out or gotten out and want to get back in. I'm not saying they're a foundation, but I think they’ve got a good shot at holding.”
“Particularly on the upside, it's always easier to go somewhere you’ve already been when it comes to markets,” he added. “Finding new prices, new highs, it's a little bit harder than just going back to where we were three weeks ago, three months ago, a year ago. It's just easier to do; we've been there.”
Analysts at CPM Group issued a ‘Buy’ recommendation for gold on Thursday, with an Initial Target Price of $4,275 and a Stop Loss at $3,970 between November 5 to 20.
“Gold prices have made higher highs and higher lows since 3 November,” they wrote. “Prices are up a couple of hundred dollars from the intraday low of $3,879.30 touched four trading days ago, last Friday, 30 October. On a technical basis it is increasingly appearing that gold prices are shifting into an upward trend. The two short-term downward trends since the end of August and since the end of January may be forming a base, with a plethora of macroeconomic, financial, and political issues supporting a revival of investor demand that could push gold prices higher once more.”
CPM said the Democrats took over the majority in the Senate and House as expected, but by a wider margin. “This should be interpreted more as a repudiation of the Trump Administration and Republican actions, with voter polling suggesting that corruption surged as an issue in the last three months, rather than as a vote of support for proposed Democrat policies,” they said. “Meanwhile, the conflict between the U.S. and Iran continues, inflation remains high and problematic, and the Trump Administration remains in office as the executive branch. The political and economic concerns continue. The newly elected officials will not take office until 3 January.”
“The longer that gold prices hold and edge higher, the more potential there could be for a spike in prices.”
Michael Moor, founder of Moor Analytics, sees gold prices declining next week.
LOWER unless we break back above the formation mentioned below,” he said. “In a Higher time frame: I cautioned on 8/16/18 the break above $1,183.0 warned of renewed strength. We have seen $4,443.1. These are OFF HOLD. We held exhaustion with a 56268 high and rolled over $1,651.1. This is ON HOLD. On a medium timeframe basis: The trade below 52554 projected this down $740 (+)—we attained $1,376.1. The trade below 52036 brought in $1,324.3 of pressure. The trade below 51606 brought in $1,281.3 of pressure. These are ON HOLD. We held exhaustion with a 49177 high and rolled over $1,038.4. The break below 48185 projected this down $185 (+)—we attained $939.2. The trade below 47923 projected this down $205 (+)—we attained $913.0. These are ON HOLD.”
“On a lower timeframe basis: The break below 46369 brought in $757.6 of pressure. The break below 45886 projected this down $205 (+)—we attained $709.3. The trade below 44227 projected this down $400 (+) max—we attained $543.4. The break below 43582 brought in $478.9 of pressure. The break back below the 42183 and 42167 lines brought in $339.0 and $337.4 of pressure, respectively. The break back below 41979 (-4.6 tics per/hour) brought $318.6 of pressure. These are ON HOLD. The trade above 40341 (-5.7 tics per/hour) projects this upward $145 (+)—we have attained $121.7. The trade above 40470 (-4.6 tics per/hour) has brought in $108.8 of strength. These are ON HOLD. The trade back below 41113 (+.3 of a tic per/hour) now warns of pressure. A maintained gap lower will leave a minor bearish reversal. Decent trade above 41122 (-2.2 tics per/hour starting at 7:00am) will project this up $95 (+).”
At the time of writing, spot gold last traded at $4,069.63 per ounce for a gain of 1.23% on the week and a loss of 0.43% on the day.
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