With the midterm elections settled, Democrats have swept both the Senate and the House. Although markets had already expected Democrats to retake the House, the Senate was also reclaimed with a 54-46 majority, which was slightly more than markets had anticipated.
Gold prices once rose 1.9%, nearing $4,140 per ounce. U.S. Treasury yields fell across the board overnight, while the dollar weakened 0.4% on the election results, which dealt a heavy blow to the Trump administration. In the Asia-Pacific session on Thursday, both the dollar and Treasury yields fell further. Falling yields often support gold prices because gold pays no interest, while a weaker dollar makes precious metals priced in other currencies more affordable.
Gold has once again responded to a favorable macroeconomic environment. We are cautiously optimistic that gold may be finding its footing, but easing expectations of Fed tightening and a recovery in investment demand remain key to sustaining the rally.
After Democrats defeated Republicans by a landslide in the midterm elections and took control of Congress, Trump said there are currently no immediate plans to launch an attack on Iran.
Iranian Parliament Speaker and senior U.S. negotiator Mohammad Bagher Ghalibaf said the midterm elections showed that Americans had voted “against war.”
Brent crude futures fell below $100 per barrel on Wednesday, hitting a low not seen since early October. WTI also dropped to around $87 per barrel.
Traders will closely watch Friday’s U.S. nonfarm payrolls report for more clues about the economic outlook and interest rate trajectory. If inflationary pressures are brought under control, it will give the Fed more room to pursue a more accommodative monetary policy.
Plugin Case Studies
Gold: Prices have reclaimed the $4,000 and $4,100 levels overnight, and the recent rebound pattern is clear: after a sharp rally, prices consolidate sideways before breaking higher again. Intraday, we will watch whether prices can form a new consolidation structure near $4,100, and look for V-shaped reversal signals after sweeping liquidity around $4,100/$4,110.
(Gold 15-minute chart)
Nasdaq: Democrats swept Congress, and although AI regulation may tighten, the risk of a U.S.-Iran conflict may ease, which would be positive for financing costs. Therefore, we recommend staying on the sidelines for now, waiting for the news to be further digested or for the technical setup to show a clearer direction.
(Nasdaq 15-minute chart)
Crude: Prices have broken below the $90 level and moved into the $87 zone, and there are currently no signs of a bottom or stabilization. The primary intraday liquidity zone is the $89/$90 area, and after a sweep, prices may fall again.
(Crude 15-minute chart)
Key economic data and events to watch today:
18:00 Eurozone September producer price index (year-on-year)
20:00 UK official bank rate
21:30 U.S. initial jobless claims, seasonally adjusted (thousands) (week ending Oct. 31)
