A Weaker Dollar Boosts Gold

Global financial markets remain completely on edge right now. Gold prices spiked massively at the start of Asian trading today, hitting $4,134.83 an ounce. This marks the absolute highest level since October 22, recording the biggest daily gain since mid-August. U.S. gold futures for December delivery also jumped 1.8 percent to $4,144.20. A significantly weaker US dollar is currently driving this massive precious metal rally. Investors are frantically trying to assess the likelihood of aggressive regulatory changes in Washington.

Political Chaos and Interest Rates

The dollar fell sharply on Wednesday following the Democrats' landslide victory in the U.S. midterm elections. This massive political shift temporarily removed a major source of market uncertainty. However, traders are now desperately waiting for Friday's US non-farm payrolls report. This crucial data will dictate the Federal Reserve's upcoming monetary policy decisions. A weak dollar instantly makes gold much more attractive for holders of foreign currencies.

Bracing for the Fed

Traders currently believe there is an 83 percent probability that the Federal Reserve will hike interest rates this December. High interest rates typically destroy the appeal of non-yielding assets like gold. However, current political panic is overriding standard market logic. Other precious metals also surged, with silver rising 1.7 percent to $53.12 and palladium gaining 2.6 percent to hit $1,030.14. Do not make blind investments during this highly volatile period.

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