Why gold and silver prices surged up to 6% in just two sessions and what lies ahead

The US mid-term elections have changed the dynamics of global markets overnight. The US stock markets surged by as much as 3% after the Democrats swept both congressional chambers. The Dow Jones soared over 1500 points, the S&P rose 1.6%, and the NASDAQ 100 rose 0.9%. At the same time, crude oil prices fell to a four-week low, plunging 17.3% this week alone.

Besides this, gold and silver prices also witnessed a sharp rally from lower levels this week, especially in the past two trading sessions. The rally can be characterised by structural factors that changed after the US mid-term elections. Gold prices bounced back from one-year lows this week. Spot gold prices surged over 5% in just two trading sessions around the US mid-term elections. The spot prices made a low of $3,874 per ounce this week and bounced back to an intra-week high of $4,146 per ounce on Thursday.

Similarly, the silver prices also bounced back from one-year lows this week. The global spot silver prices surged from $48.9 per oz on Wednesday to $53.5 per oz on Thursday, surging over 6% in the two trading sessions.

The sharp swing from one-year lows has regained investors’ attention to precious metals. Here is what is driving the rally in gold and silver prices.

Dollar plunges, gold rises

The US dollar index has always had an inverse relationship with precious metal prices. Gold and silver prices are denominated in dollars; consequently, as the dollar falls, it reduces the purchasing power of the currency and requires more dollars to purchase the same amount of gold or silver. On the flip side, a fall in the reserve currency appreciates other currencies against the dollar, which makes it cheaper to purchase gold, leading to strong demand for the precious metals.

Fall in bond yields

Bond yields have an inverse correlation with precious metal prices: as bond yields fall, gold prices surge, and vice versa. A falling currency and bond yields reduce the opportunity cost of gold, making it a better alternative to other assets. Besides this, in the current scenario, real yields have fallen faster than the nominal yields as inflation expectations remain high amid elevated fuel prices and stronger labor data. A compressed real yield (nominal yields minus inflation expectations) makes precious metals more attractive to hold in comparison to government securities.

Central bank buying

Amid the sharp volatility in currency pairs and fluctuations, the current low dollar index scenario could also drive robust demand from global central banks for gold. Gold continues to hold as a natural hedge against currency fluctuations and inflation. Central banks across the world have purchased 321 tonnes of gold in Q3 of 2026, up 42% YoY. On a YTD basis, central banks have bought 675 tonnes of gold, up 6% YoY. Meanwhile, the Chinese Central Bank bought 63 tonnes of gold, followed by Poland at 40 tonnes.

What lies ahead?

Gold and silver prices have largely remained in a muted territory in 2026 on a YTD basis, delivering -4.6%. Meanwhile, silver prices too have fallen 27% in 2026 on a YTD basis. After delivering over 300% returns in 2025, silver prices have erased 56% of those gains in 2026 to date. Here is what the charts indicate for gold and silver prices.

Gold

On the daily charts, gold prices have surged above the 20 EMA levels for the first time in August 2026, indicating a revival in the broader momentum. Going forward, $4,000 per ounce now stands as a long-term threshold level for gold prices to watch out for.

Silver

Silver spot prices have surged over 6% from the 52-week low levels, but have yet to cross their 20-day moving average on the daily charts. This indicates a sideways-to-bullish trend in silver prices until it crosses the $54 per oz mark.