Gold and Silver Rise Amid Post-Election Market Shifts

Gold prices extended their recovery, surging above $4,000 per ounce to near two-week highs amid market volatility following the US midterm elections. The rally was supported by a weaker US dollar, lower Treasury yields, and reported central bank buying, while silver prices also posted gains. However, some analysts caution that near-term prospects face headwinds from expectations of continued tight monetary policy.

US Dollar Fluctuates as Focus Shifts to Fed Policy

The US Dollar initially declined broadly against other major currencies following the US midterm election results, providing a tailwind for commodities like the British Pound, which hit a seven-week high. However, the dollar later pared its losses and began to rebound as market focus shifted from political outcomes to strong US economic data and the potential for another Federal Reserve interest rate hike.

Energy Prices Plunge on Geopolitical Hopes

Crude oil prices experienced a sharp weekly decline, with Brent crude falling over 10% to trade below $100 per barrel for the first time since early October. The significant selloff was attributed to the outcome of the US elections, which spurred market speculation about a potential de-escalation of geopolitical tensions involving Iran.

Global Central Banks Maintain Hawkish Outlook

Several central banks outside the US signaled a continued focus on fighting inflation, a potential headwind for non-yielding assets. A European Central Bank official noted a high chance of a December rate hike, while Sweden's Riksbank raised its policy rate. Markets also awaited an imminent policy decision from the Bank of England, with a rate increase widely expected.