Gold Prices Rise Nearly 3% After US Midterm Elections Amid Mixed Expert Views

Gold prices climbed almost 3 percent on Wednesday, sparking discussions among analysts about the potential for a near-term recovery. This price movement followed the results of the recent United States midterm elections, where the Democratic Party achieved better outcomes compared to the Republican Party led by President Donald Trump. The gains in gold, however, have not convinced all experts that a lasting rally is underway. Market watchers remain split between viewing the rebound as a short-lived relief bounce and anticipating sustained upward momentum, with volatility expected to continue in the coming months.

On international commodity markets, gold closed at $4,042.20 per ounce, reflecting a 2.9 percent increase. Meanwhile, in India, the precious metal was priced at ₹141,055 per 10 grams. These figures represent a significant move after a period of relative stagnation and uncertainty.

Manav Modi, a commodities analyst at Motilal Oswal Financial Services, expressed optimism about gold’s near-term prospects. He attributed the rally to a weakening US dollar index and declining treasury yields, both factors that typically support higher gold prices. Modi predicts that gold could reach $4,200 per ounce (₹148,000 per 10 grams) soon, with medium-term targets set between $4,500 and $4,700 (₹160,000-168,000 per 10 grams). He also identified recent price lows around $3,800-$3,900 (₹135,000-138,000) as attractive buying points for investors looking to accumulate gold.

Despite this positive outlook, some analysts remain cautious. Ashish Rajodiya, head of commodities at PL Capital, described the recent spike as primarily a temporary relief rally, driven by short-covering rather than fundamental strength. He warned that gold prices might face another correction once they approach the ₹148,000-149,000 range, potentially dropping back toward a support level near ₹130,000. Rajodiya emphasized that until inflation shows clear signs of easing and interest rates begin to decline, gold may stay under pressure. He advised investors to hold off on new purchases at current price levels.

The physical demand for gold also shows signs of improvement. Yogesh Singhal, chairman of the All Bullion and Jewellers Association, noted a notable rebound in gold jewellery sales after a sluggish first nine months of the year. According to Singhal, demand has picked up sharply over the last month, helped by the Diwali festival season. If this momentum carries forward into the upcoming wedding season, jewellers might recover losses incurred earlier in the year.

Singhal added that although gold prices are higher compared to the previous year, the total value of jewellery purchases has remained largely steady. This indicates that while the volume of gold sold may have dropped, the overall spending on gold jewellery has held firm, pointing to a recovering consumer interest amid fluctuating prices.

Gold has traditionally been seen as a safe-haven asset, especially during periods of political uncertainty and economic shifts. The recent US midterm elections have once again highlighted gold's role in investor portfolios as a hedge against volatility. However, the mixed views from analysts reflect the complex dynamics influencing gold prices, including currency movements, inflation trends, interest rate policies, and physical demand from key markets like India.

Investors and market participants will be closely monitoring these developments over the next few months. The direction of inflation, Federal Reserve policies, and geopolitical factors will likely play crucial roles in determining whether gold’s recent gains can be sustained or if the market will experience further fluctuations.