By Sherin Sans
Nov 4 (Reuters) - Gold prices climbed 3% on Wednesday, as a post-election slide in the dollar lifted demand for bullion after Democrats swept the US midterm elections, while investors awaited this week's US payrolls data for fresh signals on the Federal Reserve's rate outlook.
Spot gold rose 3% to $4,046.91 per ounce by 0928 GMT, while US gold futures for December delivery rose 3% to $4,057.20.
"The Democrat sweep in the US midterm elections appears to have boosted gold prices as investors
become more worried about the fiscal outlook.
"Investor concern about fiscal risks is also supporting the price of other precious metals," said Hamad Hussain, senior climate and commodities economist at Capital Economics.
A sweeping victory by Democrats in the US midterm elections sent the dollar tumbling on Wednesday, as investors weighed the prospect of tighter AI regulation and its potential drag on economic growth.[USD/]
Democrats seized control of both the Senate and House, scoring wins in Republican strongholds for the first time in generations as tens of millions of voters delivered a scathing rebuke to President Donald Trump.
A weaker dollar makes dollar-denominated gold less expensive for buyers holding other currencies, supporting demand for the precious metal.
"That said, the fact that the Fed is likely to remain hawkish due to the inflationary backdrop means that the scope for further gains in gold prices is limited. Meanwhile, given that gold has increasingly become positively correlated with equities, continued weakness in tech stocks could also weigh on gold prices," Hussain said.
Traders currently see an 83% chance that the Federal Reserve will raise rates in December, according to CME's FedWatch tool. Higher interest rates increase the opportunity cost of holding non-yielding gold.
Investors are also awaiting Friday's US non-farm payrolls report for further cues on the central bank's trajectory.
On the geopolitical front, Iran and the US are still far from a deal to end their war, a senior Iranian official told Reuters on Tuesday, as US President Donald Trump declined to rule out a resumption of US combat operations after the elections in the United States.
Among other metals, spot silver gained 4.4% to $51.99, platinum rose 3.2% to $1,461.58 and palladium climbed 5.6% to $985.64.
(Reporting by Sherin Sans in Bengaluru; Editing by Shreya Biswas)
