Nov 4 (Reuters) - Gold prices climbed 3% on Wednesday as the dollar slid, lifting demand for bullion, after Democrats swept the US midterm elections, while investors awaited this week's US payrolls data for fresh signals on the Federal Reserve's rate outlook.
Spot gold rose to $4,046.74 per ounce by 1234 GMT and was on track to log its biggest daily gain since August 19. Earlier in the session, it hit $4,050.99, its highest level since October 29.
US gold futures for December delivery were up 2.9% to $4,054.60 per ounce.
Democrats seized control of both the Senate and House, scoring wins in Republican strongholds for the first time in generations as tens of millions of voters delivered a scathing rebuke to President Donald Trump.
"The elections appear 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.
"Investor concern about fiscal risks is also supporting the price of other precious metals."
The dollar tumbled on Wednesday, as investors weighed the prospect of tighter AI regulation and its potential drag on economic growth.
A weaker dollar makes dollar-denominated gold less expensive for buyers holding other currencies, supporting demand for the precious metal.
"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. Meanwhile, given that gold has increasingly become positively correlated with equities, continued weakness in tech stocks could also weigh on gold prices," Hussain said.
Traders currently see an 82% chance that the Federal Reserve will raise rates in December, according to CME's FedWatch tool. Higher interest rates increase the opportunity cost of holding non-yielding gold.
Friday's US non-farm payrolls report could give investors further cues on the central bank's trajectory.
On the geopolitical front, Iran and the US are still far from a deal to end their war, a senior Iranian official told Reuters on Tuesday, as US President Donald Trump declined to rule out a resumption of US combat operations after the elections in the United States.
Among other metals, spot silver gained 4.8% to $52.13 per ounce, platinum rose 3.6% to $1,467.60 and palladium climbed 6.5% to $995.06.
Reporting by Sherin Sans in Bengaluru; Editing by Shreya Biswas, Jonathan Ananda and Harikrishnan Nair
