Gold hits two-week high as dollar and Treasury yields fall. Is it too late to buy?

Gold advanced more than 1% on Thursday to its highest levels since October 20 amid a selloff in U.S. stocks after the Democrats’ midterm election victory. Analysts warn, however, that the boost could prove short-lived: further gains will depend on the direction of the dollar and bond yields, as well as whether the new Congress can rein in inflation.

Gold reached $4,146 per ounce in intraday trading. The move followed the shift in control of Congress from Republicans to Democrats in the midterm elections, Barron’s reports. Gold’s second consecutive day of gains came alongside a softer dollar and lower long-term Treasury yields.

Investors are also awaiting the October U.S. jobs report for further clues about the Fed policy outlook, Reuters reports. Gold is traditionally viewed as a haven in periods of political uncertainty and heightened geopolitical risks, including those stemming from the war with Iran, Barron’s notes. The dollar index is at its weakest level since September 30, which makes dollar-priced gold more affordable for buyers holding other currencies. The benchmark 10-year Treasury yield also approached a two-month low, writes Reuters.

As recently as last week, however, gold was down at $3,885 per ounce, its lowest level in a year and 27% below the record above $5,600 set in late January.

Whether gold can sustain its gains will depend on whether the new Congress can lower energy prices, curtail government spending, and push back against inflationary policies from the Trump administration, including tariffs, in the view of State Street Investment Management analyst Aakash Doshi. “A potentially less hawkish Fed path and weaker dollar should be more critical in supporting higher gold prices,” Doshi said.

Political gridlock in Washington does not automatically translate into higher gold prices, notes Daniela Hathorn, an analyst at online trading platform Capital.com. What matters is whether investors interpret the election results as easing inflation and government borrowing pressures or increasing uncertainty around the U.S. economy, Barron’s reports, citing Hathorn. “Both could support gold under certain circumstances, but the direction of real yields and the dollar will remain crucial,” she added.

Higher gold prices also lifted gold-mining stocks on Thursday. The VanEck Gold Miners ETF, which holds shares of leading gold producers, rose almost 4%. Among its largest holdings, Newmont, Agnico Eagle Mines, Barrick Mining, and AngloGold Ashanti advanced.

Demand from central banks also remains strong. According to the World Gold Council, central bank gold purchases, notably by China and Poland, increased 6% year over year.