After rising sharply early on in the session, gold prices retreated and gave up a significant portion of their gains, but still managed to close on a firm note on Wednesday as the dollar stayed weak against major currencies.
The U.S. midterm election results saw the Democrats winning control of the House of Representatives and the Republicans tightening their hold on the Senate. The split verdict is certain to put brakes on President Donald Trump's plans for another round of tax cuts and hit the passage of infrastructure spending.
Reacting to midterm election results, the dollar weakened against most major currencies, and this prompted traders to rush to the safe haven of the yellow metal.
The dollar index eased to a low of 95.48 before recovering some lost ground and edging up to around 95.85, still down by more than 0.25%.
Gold futures for December rose to $1,237.40 an ounce before settling for the session at $1,228.70, gaining $2.40, or 0.2%.
On Tuesday, gold futures ended down $6.00, or 0.5%, at $1,226.30 an ounce.
Silver futures for December ended up $0.069, at $14.569 an ounce, while Copper futures for December closed at $2.7545 per pound, gaining $0.0220 for the session.
With the election results having come in line with expectations, the focus is now on the U.S. Federal Reserve's monetary policy meeting that got underway today. The Fed is scheduled to announce its policy on Thursday. The central bank is widely expected to hold rates and markets are looking ahead to the accompanying statement for its views on inflation and the economy, besides clues about future rate hikes.
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