Bengaluru — Gold rose on Wednesday as the US mid-term elections delivered a split US Congress and pressured the dollar, with investors now turning their attention to a US Federal Reserve meeting for clues on future interest rate hikes.

Spot gold was up 0.6% to $1,233.88 an ounce at 11.06am GMT, while US gold futures climbed 0.7% to $1,235.40 an ounce.

“This outcome of the mid-term elections was expected by the financial markets. It would have been a big thing if gold was surprised by that,” said Julius Bär analyst Carsten Menke. “Today we just see gold moving in lock-step with the dollar; the dollar is down and that is what is mirrored in the gold price.”

The dollar index fell half a percent against its main rivals, making bullion more attractive for holders of other currencies, as a split Congress dampened expectations for a major fiscal policy boost to the economy.

Democrats won control of the US House of Representatives, giving them the opportunity to block US President Donald Trump’s push for a further round of tax cuts and deregulation — measures that have turbocharged the US economy, stock markets and the dollar, and have kept the Fed on a policy-tightening path.

“This will, presumably, put paid to any further tax cuts, which means in the longer term that the Fed will need to implement fewer rate hikes, which, per se, will have a negative impact on the  dollar,” Commerzbank analysts said in a note.

“President Trump may, instead, focus more on foreign policy, which is likely to generate additional uncertainty. Gold would profit long term from both factors.” Investors often turn to gold as an insurance during times of financial and political uncertainty.

Market participants will now keep a close eye on a two-day Fed meeting starting later on Wednesday to gauge the outlook for US monetary policy. While the Fed is expected to keep interest rates steady, markets are waiting to see whether it offers clues about possible rate increases in December and in 2019.

Meanwhile, holdings of the world’s largest gold-backed exchange-traded fund (ETF), SPDR Gold Trust, fell for the third straight session to 756.70 tonnes on Tuesday.

Among other precious metals, silver jumped 1.1% to $14.70 an ounce, while palladium rose 0.6% to $1,121.99 an ounce. Platinum climbed more than 1% to $876.60 an ounce after hitting $877.50 an ounce, its highest in more than four months.