Investing.com - Gold prices moved higher on Wednesday as midterm elections created a divided U.S. Congress, pushing the dollar lower.
At 9:56 AM ET (14:56 GMT), gold futures for December delivery on the Comex division of the New York Mercantile Exchange gained $5.40, or 0.44%, to $1,229.20 a troy ounce.
Meanwhile, the?EUR?U.S. U.S. dollar index, which tracks the greenback against a basket of six major currencies, was down 0.47% to 95.67.
A weaker greenback makes the dollar-denominated precious metal more expensive for holders of foreign currencies.
As Democrats won control of the House of Representatives, while Republicans tightened their hold on the Senate, the resulting political gridlock is expected to curtail U.S. President Donald Trump’s legislative agenda, potentially putting the brakes on plans for a second round of tax cuts or the passage of infrastructure spending.
With hopes for fiscal stimulus diminishing, the pressure for the Federal Reserve to tighten policy more aggressively has lessened, placing downward pressure on the dollar and benefiting gold.
The midterm results come just as the Fed kicks off its two-day policy meeting on Wednesday. The central bank is widely expected to hold rates steady at the current range of 2.0% to 2.25%, but investors will scrutinize the statement for any hints on how the Fed views inflation and the economy.
Investors are concerned that rising wages and increasing inflationary pressures will push the Fed to raise rates at a faster pace than expected and markets currently expect the next hike to come at the following meeting in December.
In other metals trading, silver futures gained 1.16% at $14.625 a troy ounce by 9:58 AM ET (14:58 GMT).
Palladium futures advanced 2.49% to $1,122.60 an ounce, while sister metal platinum rose 0.83% at $878.70.
In base metals, copper traded up 0.49% to $2.744 a pound.