Gold prices moved lower on Friday, November 6, as a modest recovery in the US dollar interrupted a strong rally in precious metals following the Democratic Party’s victory in the US midterm elections. Despite the decline, bullion remained on track for a weekly increase of more than 5%, supported by falling Treasury yields and increased demand for defensive investments.
At 01:24 ET (06:24 GMT), spot gold declined 1% to $4,048.97 per ounce, while US gold futures fell 1.4% to $4,057.95 per ounce. The US Dollar Index gained 0.2% to 101.80, recovering some of the losses recorded earlier in the week.
Investors were also preparing for the release of US nonfarm payrolls data, which could influence expectations for Federal Reserve monetary policy and the direction of precious metal prices.
Gold Pulls Back as Dollar Recovery Pressures Precious Metals
The rebound in the US currency weighed on gold and other precious metals during Friday’s Asian trading session.
Silver declined 0.5% to $51.5215 per ounce, while platinum lost 0.6% to $1,510.78 per ounce.
Spot palladium fell 0.9% to $1,025.70, while palladium futures slipped 0.8% to $1,025.25.
The declines followed a period of strong gains for bullion, which had recently traded near $4,090 per ounce.
A stronger dollar typically reduces the appeal of gold to investors using other currencies because the metal becomes more expensive in local currency terms.
Profit-taking may also have contributed to Friday’s decline after the substantial advance earlier in the week.
Nevertheless, the retreat left gold considerably higher on a weekly basis, reflecting continued uncertainty surrounding US economic policy and global financial markets.
Democratic Election Victory Drives Bond Yields Lower
Gold’s strong weekly performance followed the Democratic Party’s success in the US midterm elections, which gave it control of both the House of Representatives and the Senate.
The result prompted investors to reconsider the outlook for fiscal policy under President Donald Trump, particularly the possibility that a divided government could restrict future spending and borrowing.
Expectations of tighter fiscal constraints contributed to a decline in US Treasury yields, which reached their lowest levels since early September.
Lower bond yields tend to support gold because the metal does not pay interest, reducing the opportunity cost of holding bullion rather than income-generating securities.
The dollar also weakened following the election results, adding to the upward momentum in gold prices.
Although the currency recovered slightly on Friday, the earlier decline in Treasury yields continued to provide support for the precious metal’s weekly performance.
Equity Market Turmoil Creates Mixed Implications for Bullion
The recent gold rally occurred alongside significant weakness in US technology stocks.
Shares linked to artificial intelligence came under pressure as investors assessed the possibility of tighter regulation following the Democratic takeover of Congress.
Concerns about the expansion of data centres, including growing opposition from communities affected by their electricity and water requirements, added to uncertainty about the sector’s investment outlook.
Technology stocks extended their decline for a third consecutive session on Friday, encouraging investors to seek safer assets.
Demand for US government bonds increased, pushing Treasury yields lower and supporting the broader appeal of defensive investments.
However, sharp equity market losses can also create temporary selling pressure on gold.
Investors facing losses in other assets may liquidate profitable gold positions to raise cash, meet margin requirements or reduce overall portfolio exposure.
This creates the possibility of short-term declines in bullion even during periods of heightened market uncertainty.
ANZ Points to Fiscal Policy Changes and Strong Central Bank Buying
Analysts at ANZ identified expectations of tighter US fiscal policy as an important factor behind the decline in Treasury yields.
A Democratic-controlled Congress could limit the scope for additional government borrowing, potentially reducing pressure on bond markets.
Such developments may benefit gold by keeping yields lower, although ANZ also noted that reduced government borrowing could weaken one source of demand for the metal.
Meanwhile, purchases by central banks continued to provide support for the physical gold market.
ANZ highlighted the strength of official-sector demand, noting:
“Central banks increased their gold reserves by a net 321 tonnes in the third quarter, the fastest rate of accumulation since late 2024.”
The buying reflected continued interest in reserve diversification amid geopolitical uncertainty and concerns about fiscal discipline.
Central bank demand has remained an important underlying influence on gold prices, providing support even as short-term movements respond to changes in the dollar and bond yields.
US Jobs Data in Focus as Investors Assess Fed Outlook
The next major event for gold traders is the release of the US nonfarm payrolls report later on Friday.
The employment figures will provide additional information about economic conditions and could affect expectations for the Federal Reserve’s next interest-rate decision.
A stronger labour market could increase the likelihood of tighter monetary policy, potentially supporting the dollar and Treasury yields.
Higher interest rates generally make non-yielding assets such as gold less attractive compared with interest-bearing investments.
Conversely, weaker employment data could reduce expectations of further monetary tightening and provide additional support for bullion.
The report is therefore expected to be closely watched by investors seeking indications of the likely direction of US borrowing costs.
Gold Holds Substantial Weekly Gains Despite Short-Term Pressure
Friday’s decline highlighted the sensitivity of gold prices to movements in the dollar and changes in investor positioning.
However, the metal remained on course for a weekly advance exceeding 5%, reflecting the impact of lower Treasury yields, political developments and strong institutional demand.
The outlook remains influenced by several competing factors, including the possibility of further equity market volatility and the potential for investors to sell gold holdings to raise liquidity.
Central bank purchases and uncertainty surrounding US fiscal policy could continue to provide underlying support.
Investors will now assess the employment report for fresh indications of the Federal Reserve’s policy direction, with the resulting movements in Treasury yields and the dollar likely to influence gold’s next trading phase.
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