《Hui Hai Wei Yan》 With about 20 days remaining until the U.S. midterm elections (November 3), the outcome will significantly impact the U.S. dollar and gold prices. Currently, due to unfavorable factors such as high U.S. inflation and interest rates, the stalemate in the U.S.-Iran conflict, and sluggish job growth and GDP expansion, I believe the likelihood of Trump-led Republicans losing the election is quite high, potentially losing control of both the Senate and the House of Representatives. According to the latest data from Polymarket, the probability of “Democrats sweeping both chambers” is currently around 63% to 65%. If Trump loses control of both chambers, it will put pressure on the U.S. dollar, while providing upward momentum for gold prices, as well as for non-U.S. currencies.
If the Republican Party led by Trump loses control of both chambers in the midterm elections, gold will generally benefit overall in the medium to long term, considering economic and financial market conditions along with safe-haven factors.
First, pressure on the U.S. dollar exchange rate is the main positive factor. As gold is priced in U.S. dollars, a weaker dollar typically pushes gold prices higher. After the Republicans lose control of Congress, resistance will increase significantly against the previous Trump administration’s policies of large-scale tax cuts, fiscal stimulus, and relaxed banking regulations. Market expectations for strong U.S. economic growth and rising inflation will cool, putting downward pressure on the dollar, which in turn supports gold and non-U.S. currencies.
Second, political gridlock boosts safe-haven sentiment. When the White House and Congress are controlled by different parties, funding bills, debt ceiling negotiations, and major legislation often face significant obstacles, increasing the risk of government shutdowns. Policy uncertainty drives markets toward safe-haven assets, shifting capital from risk assets such as U.S. stocks into safe-haven assets like gold, driving gold prices stronger over the medium to long term, though it may also trigger corrections in U.S. stocks.
Third, U.S. Treasury yields are likely to decline. With economic stimulus facing obstacles, market expectations for the Federal Reserve maintaining high interest rates or aggressively hiking rates will weaken, making it likely that U.S. Treasury yields will fall. Gold, which pays no interest, has a negative correlation between its holding cost and real interest rates. When nominal and real interest rates decline, gold’s relative attractiveness increases. If the U.S. dollar weakens simultaneously, gold prices will gain even stronger support.
Overall, if the Republicans lose control of both chambers, increased difficulty in governance, rising political uncertainty, and heightened expectations of falling interest rates will create medium- to long-term tailwinds for gold. In the short term, there may be volatility, but under a divided Congress scenario, gold’s safe-haven value will become more prominent, and demand for allocation is expected to continue rising.
Today’s market focus will be on the U.S. September Consumer Price Index (CPI) data to be released tonight. Although long-term U.S. bond yields have recently declined, they remain relatively high, keeping gold prices under pressure. If tonight’s year-on-year U.S. CPI increase comes in below the expected 3.6%, gold prices may rebound; otherwise, they are likely to continue trading within the range of 4,000 to 4,200 dollars.
*Key events this week*
Wednesday (14th)
20:30: U.S. September CPI, forecasted year-on-year rise of 3.6%, previous value was 3.4%.
Thursday (15th)
20:30: U.S. September Retail Sales, forecasted month-on-month rise of 0.3%, previous value was 1.2%.
Friday (16th)
11:30: Speech by Fed Chair Powell
*Article written on October 14, 2026, at 14:10
《Mao Wailian, Head of Futures and Market Analysis Department, Ko Gok Futures》
*《Economic Intelligence》’s signed and/or unsigned articles reflect the personal opinions of the authors and do not represent the stance of 《Economic Intelligence》. 《Economic Intelligence》 serves as a platform providing free speech.
If the Republican Party led by Trump loses control of both chambers in the midterm elections, gold will generally benefit overall in the medium to long term, considering economic and financial market conditions along with safe-haven factors.
First, pressure on the U.S. dollar exchange rate is the main positive factor. As gold is priced in U.S. dollars, a weaker dollar typically pushes gold prices higher. After the Republicans lose control of Congress, resistance will increase significantly against the previous Trump administration’s policies of large-scale tax cuts, fiscal stimulus, and relaxed banking regulations. Market expectations for strong U.S. economic growth and rising inflation will cool, putting downward pressure on the dollar, which in turn supports gold and non-U.S. currencies.
Second, political gridlock boosts safe-haven sentiment. When the White House and Congress are controlled by different parties, funding bills, debt ceiling negotiations, and major legislation often face significant obstacles, increasing the risk of government shutdowns. Policy uncertainty drives markets toward safe-haven assets, shifting capital from risk assets such as U.S. stocks into safe-haven assets like gold, driving gold prices stronger over the medium to long term, though it may also trigger corrections in U.S. stocks.
Third, U.S. Treasury yields are likely to decline. With economic stimulus facing obstacles, market expectations for the Federal Reserve maintaining high interest rates or aggressively hiking rates will weaken, making it likely that U.S. Treasury yields will fall. Gold, which pays no interest, has a negative correlation between its holding cost and real interest rates. When nominal and real interest rates decline, gold’s relative attractiveness increases. If the U.S. dollar weakens simultaneously, gold prices will gain even stronger support.
Overall, if the Republicans lose control of both chambers, increased difficulty in governance, rising political uncertainty, and heightened expectations of falling interest rates will create medium- to long-term tailwinds for gold. In the short term, there may be volatility, but under a divided Congress scenario, gold’s safe-haven value will become more prominent, and demand for allocation is expected to continue rising.
Today’s market focus will be on the U.S. September Consumer Price Index (CPI) data to be released tonight. Although long-term U.S. bond yields have recently declined, they remain relatively high, keeping gold prices under pressure. If tonight’s year-on-year U.S. CPI increase comes in below the expected 3.6%, gold prices may rebound; otherwise, they are likely to continue trading within the range of 4,000 to 4,200 dollars.
*Key events this week*
Wednesday (14th)
20:30: U.S. September CPI, forecasted year-on-year rise of 3.6%, previous value was 3.4%.
Thursday (15th)
20:30: U.S. September Retail Sales, forecasted month-on-month rise of 0.3%, previous value was 1.2%.
Friday (16th)
11:30: Speech by Fed Chair Powell
*Article written on October 14, 2026, at 14:10
《Mao Wailian, Head of Futures and Market Analysis Department, Ko Gok Futures》
*《Economic Intelligence》’s signed and/or unsigned articles reflect the personal opinions of the authors and do not represent the stance of 《Economic Intelligence》. 《Economic Intelligence》 serves as a platform providing free speech.
