Dollar Slides after Midterms: Gold, Silver Jump $1 Trillion in A Day 

By Staff, Agencies 

Gold and silver added a combined $1 trillion in market value on Wednesday, as the metals jumped after Democrats won control of the United States Congress and the US dollar fell.

Spot gold rose about 5.32% to roughly $4,139.6 an ounce, back above $4,000, while silver gained between 4.4% and 4.6% to about $52 an ounce.

The main driver was a weaker dollar. The dollar index fell about 0.4% to around 101.5, a one-month low, and the 10-year Treasury yield fell about five basis points.

A weaker dollar makes dollar-priced metals cheaper for overseas buyers, and lower yields reduce the cost of holding assets that pay no interest. The SPDR gold fund [GLD] closed up 3.68% and the iShares silver fund [SLV] up 5.17%, with silver, the smaller and more volatile market, outpacing gold.

Hamad Hussain, a senior economist at Capital Economics, told Reuters the Democratic sweep appeared to raise investor concerns about the US fiscal outlook, which added to demand for the metals.

Analysts also pointed to uncertainty over talks between Washington and Tehran, with no agreement to end the war on Iran in sight and investors watching for renewed US military action. Gold ETFs have absorbed 211 tons recently, lifting holdings to a record 4,256 tons, according to a precious metals market report.

The jump follows a sharp fall. Both metals hit 12-month lows on October 30, and gold’s close of $3,913 last Friday was the low point of the recent selloff.

Gold is still down more than 6% so far this year and silver about 26%, after surging 66% and 135% last year. Silver traded above $117 an ounce in January.