Gold prices surge 3 per cent as dollar value declines

According to a report by The Hindu, gold prices witnessed an increase of 3 per cent on Wednesday (November 4, 2026). The primary reason for this surge is the largest decline in the Dollar Index seen in over a month. As investors awaited the results of the US midterm elections, the Dollar Index fell to 101.3, its lowest level in the last 5 weeks. The Dollar Index is a tool that measures the strength of the US dollar against six major currency units. When the dollar weakens, dollar-denominated assets like gold become cheaper for consumers holding other currencies, leading to an increase in demand for the yellow metal.

On Wednesday, spot gold rose 3 per cent to reach 4,041 dollars per ounce, marking the largest daily increase in the last 2 months. Notably, gold prices had reached a one-year low on October 30. This decline was caused by increasing falls in AI and tech stocks globally and concerns among investors regarding their valuations.

Manoj Jain, Director of Prithvi Finmart Private Limited and Head of Commodity and Currency Research, stated, "It would be premature to call this a trend reversal. Today's price movement reflects the market's reaction to the midterm election results. The future trend can be determined only once the results are declared and the policies of the US administration, as well as their stance on the US-Iran war, become clear." Nevertheless, analysts believe that this bullish trend in gold prices will continue into next week.

According to the US midterm election results so far, the Democratic Party has achieved widespread victories in both the Senate and the House. According to NBC News estimates, the Democrats are poised to win at least 258 seats. At least 218 seats are required to secure a majority in the House, placing the Democrats in a comfortable position for victory.

Mr. Jain further added that many uncertainties and policy concerns will be resolved after the results. If crude oil prices remain below 100 dollars per barrel and the Strait of Hormuz reopens, precious metals are expected to stabilize by the end of the year. Low crude oil prices could reduce inflation and impact the US Federal Reserve's interest rate trajectory. Additionally, the reopening of the Strait of Hormuz could reduce geopolitical risks. However, this may have a mixed effect on gold, as reduced tension could lead to a decrease in safe-haven demand.

Whether this recovery in gold prices transforms into a long-term rally or remains a short-term surge will depend on US Treasury yields, real interest rates, and the direction of the dollar. Regarding the Indian market, demand for gold is likely to remain high ahead of the festive and wedding seasons. According to Mr. Jain, gold prices in Indian markets may stabilize around 1,30,000 rupees per 10 grams by the end of the year.