The new political landscape in Washington could impact the outlook for the US economy, the policies of President Donald Trump’s administration, and developments in financial markets.
The Democratic Party wins big, gold surpasses $4,000.
Some American media outlets have identified the Democratic Party as having gained control of both the House and the Senate after the 2026 midterm elections. This result presents President Donald Trump with numerous obstacles in implementing his agenda and also allows the opposition to conduct investigations into the administration.
Mr. Trump said he was ready to accept the results, cooperate with the Democratic Party, and hoped the two sides could find common ground.
The gold market reacted strongly to this news. By 1:20 PM on November 4th, the spot gold price had risen by $90, or 2.3%, to $4,020 per ounce. Earlier, the precious metal had risen to $3,954 per ounce as initial vote count signals indicated a Democratic lead.
Domestically, as of 1:45 PM, the price of SJC gold increased by 1.8 million VND/ounce for both buying and selling compared to the end of the previous session, reaching 139.4 million VND and 142.4 million VND/ounce respectively. SJC gold rings increased by 2.1 million VND, reaching 135.8 million VND and 139.8 million VND/ounce.
The recovery followed a difficult October, when gold prices lost nearly 7%, the sharpest decline since 2008, at one point falling to $3,870 per ounce. Bottom-fishing and short-covering contributed to the reversal in gold prices.
Commerzbank argues that the previous correction was excessive, while the fundamental factors supporting gold remain.
In the oil market, WTI crude rose 0.3% to $96.4 per barrel, while Brent crude rose 0.3% to $103.9 per barrel at around 1:25 PM.
Global stock markets showed mixed performance. US indices rose 0.4-0.8% before trading began, while European stocks fell 0.5-1.2%. China’s CSI 300 rose nearly 2.1%, the Hang Seng gained 1.2%, while Japanese stocks declined.
In Vietnam, the VN-Index reversed course and rose nearly 27 points, or 1.6%, to 1,727 points at 1:28 PM. The VN30-Index increased by 1.8%.
Notably, the US dollar weakened as the DXY index fell 0.35% to 101.5 points. Yields on 2-year US Treasury bonds fell to 4.605% per annum, while 30-year yields dropped to 5.317% per annum. The decline in the US dollar and bond yields contributed to the increased attractiveness of gold, an asset that does not yield periodic returns.
Gold benefits, AI faces challenges?
A Democratic victory could bring about significant changes to the outlook for the U.S. economy investment flows, and monetary policy in 2027.
According to Christopher Vecchio, Head of Futures and Forex Strategy at Tastylive, Democratic control of Congress could create a favorable environment for gold, especially if political instability weakens economic growth.
One sector that could be impacted is artificial intelligence (AI). Massive investments in data centers and AI infrastructure are a key driver of US economic growth. However, policy obstacles could slow project deployments, leading to a decline in business investment over the next 3-6 months.
If this scenario unfolds, the Fed could have more room to ease monetary policy. Falling real US bond yields and a weaker dollar would reduce the opportunity cost of holding gold, thereby supporting the precious metal.
However, Congress will only officially take office in January 2027. In the coming months, Trump may still push through many policy initiatives. This is a period where the White House must find a way to maintain its agenda as the Democrats gain control of Congress.
From a long-term perspective, Jen Bawden, founder of Bawden Capital, believes that gold will continue to be supported by the growing budget deficit and public debt burden in the US. These issues have no fundamental solutions, regardless of which party controls Congress, and could force the Fed to ease monetary policy in the future.
However, the outlook for gold is not entirely favorable. Michele Schneider, chief market strategist at MarketGauge, warns that US bonds are competing with gold as a safe-haven asset. A strong dollar and high interest rates could also continue to put pressure on the precious metal.
Meanwhile, the outlook for oil prices depends primarily on the developments in the US-Iran conflict and shipping activity through the Strait of Hormuz. The two sides have yet to narrow their differences on the nuclear program, sanctions, and conditions for reopening this strategic shipping route.
If tensions escalate, oil supplies could be disrupted, driving up energy prices and inflation. The Fed might then have to maintain high interest rates for longer, negatively impacting gold and stocks.