Gold Surpasses $1,700 As The Dollar Falls Amid Election-related Anxiety

As investors awaited the midterm election results, gold prices surged to a one-month high on Wednesday, helped by recovering safe-haven demand and a dropping dollar.

Spot gold traded above $1,700 for the first time since early October at 18:44 ET (23:44 GMT), while gold futures jumped to $1,715.90 per ounce. Both assets gained more than 2% on Tuesday.

This week, the dollar hit its lowest level in 1.5 months, helping metal markets. Wednesday morning's dollar index was 109.61, down 0.5%. Treasury rates fell 2%.

Instability about the US midterms boosted safe-haven buying of gold this week. Despite markets expecting a mixed result, a clear majority for incumbent Democrats or re-elected Republicans might signify a change in monetary and fiscal policy.

Some Fed members supported a smaller rate hike in December, which impacted on the currency. The markets expect the Fed to raise rates by 50 basis points (bps) in December, a smaller rise than in November.

Thursday's CPI inflation statistics may provide further light. The report is expected to show that inflation remained strong in October, perhaps prompting a Fed rate hike.

Investors took gains on the dollar's rally this year.

Copper prices rose 2% on Tuesday to a two-month high. Wednesday's copper futures stayed at $3.6627 a pound.

Prices of the red metal initially sank this week on fears of further Chinese demand delays, but a sinking dollar boosted buying of the commodity, which has plummeted drastically this year.

The dollar's strength and rising U.S. Treasury rates were the biggest drags on metal markets this year. Copper prices were also affected by fears of a global economic slowdown.

In the next few months, a shrinking supply of copper may raise prices.