Gold found buyers after the midterm election, but the economy has yet to give those buyers a clear path.
Democrats won control of both chambers of Congress, setting up divided government when the new Congress takes office. The dollar weakened, and spot gold reached $4,046.74 at 7:34 a.m. Eastern on Wednesday, up about 3%. That was an intraday spot quote, not a closing price or futures settlement.
The move followed Monday’s oil-driven rebound. Yet the economic reports on our watchlist showed demand holding up, leaving investors with reasons to stay alert to inflation and another Fed rate hike.
Factories Gave a Mixed Signal
The ISM manufacturing index rose to 55.5 in October, up from 54.5. That beat the 54.5 forecast in a Reuters poll. It marks the 10th consecutive month of expansion
Prices paid eased to 75.2 from 77.9. That was welcome progress, but the reading still showed price increases were widespread. New orders edged higher, and supplier deliveries slowed.
For gold, this was neither a clean inflation scare nor a clear all-clear. Factories were growing faster while cost pressure eased without going away.
Job Openings Held Up, Too
Tuesday’s JOLTS report put September job openings at 7.523 million, up 333,000 from the revised August figure. That exceeded the 7.1 million Reuters consensus.
Hiring reached 5.4 million. The BLS described both hiring and openings as little changed, reflecting the survey’s statistical tests despite the numerical gains.
The report offered scant evidence of a sudden labor-market slump. It also covered September, making Friday’s October payroll figures a fresher test.
The Election Move Needs Follow-Through
Wednesday’s rally showed that gold could gain despite the firm data. A weaker dollar helped, while investors weighed what divided government might mean for spending and growth.
That interpretation can change. Congress will not alter policy overnight, and political gridlock does not guarantee lower inflation or yields, particularly after President Trump has said he will become "Mr. Veto.".
Thursday’s productivity and costs report, due at 8:30 a.m. Eastern, will test whether output gains are helping firms absorb higher pay. Friday’s jobs report, at the same time, brings payrolls, wages and revisions. Neither report had been released at the time of writing.
Gold bulls should watch how prices respond if the figures come in strong. Holding gains through less friendly news would offer better evidence of a durable recovery than the election jump alone.
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byUnited States Gold Bureau