Gold is extending gains after rising approximately 3% in the previous session, with a decisive Democratic victory in the United States midterm elections weighing on the dollar and US Treasury yields, lending support to the precious metal.

Gold advanced 1.62% to $4,126.54 per ounce, while silver gained 1.09% to $52.794 per ounce.

Treasury yields and the dollar extended their declines on Thursday as markets priced in expectations that the election outcome could constrain the Trump administration’s fiscal and spending plans. Lower interest rates tend to benefit gold, as the metal yields no interest. A weaker dollar also makes gold cheaper for holders of other currencies.

“For now, much of the market reaction continues to be driven by expectations rather than reflecting concrete policy changes,” Christopher Wong, an analyst at Oversea-Chinese Banking Corp, told Bloomberg.

The gold recovery represents the most significant sign yet of a reversal in a downward trend that had persisted for several months. Even so, the metal has lost more than one-fifth of its value since the outbreak of the conflict between the United States and Iran at the end of February, as the consequent rise in energy prices fuelled expectations of a more restrictive monetary policy.

“If sustained, lower oil prices should also help contain inflation expectations and moderate the outlook for a more restrictive stance from the Federal Reserve, removing one of the key pressure factors,” Wong added. “We remain cautiously optimistic about the possibility that gold is finding support, although a more sustained recovery will likely require further moderation in Fed rate-hike expectations and a continued decline in real interest rates,” the analyst explained.

Investors are now turning their attention to the US employment report due on Friday, seeking fresh clues on the trajectory of the economy and interest rates. Signs that inflation is under control would give the Fed greater room to pursue a less restrictive monetary policy.