Gold and Silver Trim Post-Midterms Rebound as AI Tech Stocks Slump

GOLD and SILVER PRICES slipped back Thursday in London from the strong rebounds made following the Democrats' "blue wave" victory in the US midterm elections, while the US stock market sank to multi-month lows, led by a fresh plunge in AI tech stocks.

With the S&P500 index losing 3.1% to hit end-July levels, the tech-heavy Nasdaq 100 index resumed the AI sell-off, sinking 5.0% to hit its lowest since late-April as investors continued what market analysts called a "rotation" out of AI stocks.

The price of silver − expected to find almost 2/5ths of its 2026 demand from electrical and electronics use − fell $1.50 per troy ounce after rebounding nearly $5 from this week's new 2026 silver lows following the mid-term results, peaking at a 1-week high of $53.48 overnight.

Gold for London settlement also leapt at the start of Asian trade Thursday, hitting 2-week highs at $4146 per ounce as Yuan prices inside No.1 gold-mining and consumer market China also hit the highest since 20 October, gaining 2.4% for the day at ¥885 per gram.

The price of gold then fixed above $4100 at London's 3pm benchmark auction for the first time in 11 sessions before dropping as low as $4078 in late-London trade.

"The US mid-term election results introduce a new layer of unpredictability for the outlook for precious metals," says specialist consultancy Metals Focus, noting that while Democrat control of both the House and Senate will curb President Trump's tax cutting and spending agenda, "meaningful deficit reduction remains unlikely.

"Continued heavy government borrowing could limit how far longer-term yields fall."

The yield offered by 10-year US Treasury bonds, the benchmark for many corporate and consumer borrowing costs − and also impacting financial credit for leveraged speculators in markets including gold and silver − has now fallen by 7 basis points so far this week, heading for its 5th weekly drop in a row at 4.87% per annum.

But the real yield offered by inflation-protected TIPS bonds, paid over and above a rise in the cost of living, has risen by 3 basis points so far, snapping its 4-week drop from close to the highest on record.

So far this century, gold has tended to show a strong negative correlation with 10-year TIPS yields, falling as the real rate of interest rose and vice versa.

But that relationship broke down during the post-pandemic inflation of 2022, and having re-established itself again after showing an inverse but historically weak relationship when the Iran War began at the end of February, their 21-trading-day correlation has this week hit the strongest positive reading − meaning gold and real rates have now moved more in lockstep with each other − since October 2024.

The Dollar meanwhile rallied Thursday from yesterday's 5-week lows against other major Western currencies, and steadied against the Chinese Yuan after spiking Tuesday from 4.5-year lows on the People's Bank move to ease selling pressure on the US currency in the country's banking market.

Brent crude oil meantime rebounded towards $97 per barrel after sinking $25 from 4-year highs over the past 2 weeks, while Tehran's theocratic dictatorship was reported to have called Saudi Arabia, Oman and Qatar following US President Trump's orders − reported by the New York Times − for his military to resume major combat operations following his Republican Party's defeat in the midterms.