Gold Tops $4,000 and Stock Futures Steady After Democrats Win Both Chambers of Congress
Gold rose more than 2% to above $4,000 an ounce and U.S. stock futures steadied after a sharp overnight drop, as investors weighed a Democratic Congress, a weaker dollar and the jobs report due Friday.
U.S. stock index futures steadied early Wednesday after dropping sharply overnight, as investors assessed Democratic victories in the midterm elections and what a Democratic Congress could mean for taxes, spending and technology companies, according to Reuters.
Nasdaq-100 futures fell as much as 2.4% and S&P 500 futures as much as 1.4% when the scale of the result became clear, according to Reuters. By 3:13 a.m. Eastern Time, Dow futures were up 237 points, or 0.46%, S&P 500 futures were up 0.15% and Nasdaq-100 futures were up 0.26%.
Gold rises as the dollar falls
Spot gold climbed 2.2% to $4,016.01 an ounce by 0619 GMT, while U.S. gold futures for December delivery rose 2.2% to $4,026.90, according to Reuters. Spot silver gained 3.8% to $51.67, platinum rose 2.8% to $1,455.71 and palladium climbed 3.8% to $969.49.
Chris Weston, head of research at Pepperstone, told Reuters that a weaker dollar and a decline in both nominal and real Treasury yields were providing support for gold. A softer dollar makes dollar-priced bullion cheaper for buyers who use other currencies. The dollar fell to a one-month low, according to Reuters market data.
Technology shares took the first hit
The early selling was concentrated in the artificial intelligence trade, according to Reuters. A Democratic Congress is expected to look more closely at data centers, which use large amounts of power and water, and at the regulation of AI. Renewable energy shares moved in the opposite direction, on expectations of friendlier policy.
Brent crude futures slipped 26 cents to $103.34 a barrel in early trade, and U.S. West Texas Intermediate fell 53 cents to $95.56, according to Reuters. Regular U.S. trading opens at 9:30 a.m. Eastern Time, and traders now await the nonfarm payrolls report due Friday for clues on the Federal Reserve’s policy path. Traders currently see a 79% chance that the Fed will raise rates in December, according to CME’s FedWatch tool.
Reporting based on coverage by Reuters.
