Democrats won control of Congress in the 2026 midterms, and ActionForex argues the result could bring lower yields, a weaker dollar and cheaper oil. It calls that mix supportive for gold, while warning that a rout in AI stocks could cut against the metal.
Democrats won a majority in both the Senate and the House of Representatives in the midterms, securing overall control of Congress for Trump's remaining two years in office. ActionForex analysis says the shift in Washington could help gold.
Yields, oil and the dollar move
Treasury yields declined in the immediate aftermath of the election results, because the US budget deficit is less likely to spiral further amid legislative gridlock. Oil prices also saw a sharp drop following the election results, as investors think a quick resolution to the Iran conflict is more likely.
The dollar looks less well placed. ActionForex says a shallower rate path can only be negative for the dollar, although reduced trade tensions may offer some potential upside.
Why gold could benefit
Against that backdrop, the analysis describes lower yields, a weaker dollar and cheaper oil as the perfect cocktail for a more bullish gold. The best scenario for gold is if Trump wraps up the Middle East conflict and oil prices trend lower.
Slower AI rollout adds to the case. Some kind of slowdown is anticipated, which would rein in Fed rate hikes to some extent.
However, the picture is not one-directional. A prolonged rout in AI stocks may have a dampening effect on gold rather than boost safe-haven flows if investors keep selling bullion to cover equity losses or margin calls.
Funding deadline looms
Near-term politics could still intrude. Negotiations on the crucial funding bill due by December 11 are likely to get messy, potentially leading to a government shutdown unless lawmakers agree to another stop-gap bill.
Source: ActionForex
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