Gold Price Rises - Dollar Stability Supports the Precious Metal

Gold Price Rises - Dollar Stability Supports the Precious Metal

Gold prices continued to rise on Thursday. Demand for the precious metal is being supported by lower US Treasury yields and the dollar's relatively stable position. Meanwhile, investors are assessing whether a Democratic victory in the US midterm elections could help de-escalate the war in Iran.

As of 09:54 Eastern Time, or 14:54 GMT, the spot price of gold rose 1.1% to $4,107.66 per ounce. Gold futures also gained 1.1%, reaching $4,116.17 per ounce.

The US Dollar Index, which measures the dollar's exchange rate against a basket of major world currencies, rose 0.1% to 101.65 points. This came after the index fell on Wednesday to its lowest level since September 30.

Meanwhile, longer-term US Treasury yields continue to decline. According to ANZ analysts, investors expect that the new distribution of power in Congress will make it more difficult for President Donald Trump to implement his plans for tax cuts and increased government spending. As a result of the midterm elections, Democrats gained control of both chambers of Congress.

Lower bond yields are a positive factor for gold, since the precious metal generates no interest income and therefore becomes more attractive when returns on other assets decline. A relatively weaker dollar, in turn, makes gold more affordable for international buyers.

In the oil market, Brent futures recovered slightly, reaching around $97 per barrel. This followed a sharp price decline in the previous trading session, after which oil was trading near its lowest level in the past two months.

Despite the recent rise, the price of gold still remains significantly below the level it was at before the US and Israeli military operation against Iran began in late February. The conflict drove up energy prices and intensified inflationary pressure, which strengthened expectations of tighter monetary policy from central banks. Higher interest rates, in turn, typically have a negative effect on non-yielding assets, including gold.