Gold Rallies on Democratic Sweep in US Midterms; Key Levels Ahead

Gold prices climbed sharply on Wednesday after the Democratic Party secured a sweep in the US midterm elections.

A Democratic-controlled Congress will likely curtail additional tax cuts, defense spending, and overall fiscal expansion. This is supportive for gold as it limits increases in Treasury yields and the US dollar amid expectations of fewer rate hikes.

Gold could also draw support if President Trump escalates the conflict with Iran, leading to higher inflation expectations and a weaker growth outlook, a stagflation scenario.

Friday's US NFP report is unlikely to shift Federal Reserve policy unless wage growth spikes or data disappoints sharply. Attention will stay on US-Iran talks, where either escalation or de-escalation could boost gold prices.

GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME

Gold is approaching a major downward trendline. Sellers may lean on this trendline, with risk above it, aiming for a break below the major upward trendline. Buyers would like to see the price break higher, increasing bullish bets toward 4,700, with 4,500 as an initial target.

GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

A minor upward trendline defines the current bullish momentum. On a pullback, buyers may lean on this trendline with risk below, aiming to break above the downward trendline. Sellers will look for a price break lower to increase bearish bets and target a break below the major upward trendline.

GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

A minor support zone sits around 3,970. On a pullback, buyers may step in at this support with risk below, aiming for new highs. Sellers will look for a break to extend the pullback to the minor upward trendline.

UPCOMING CATALYSTS

Today's data includes the US ADP employment change and ISM Services PMI. Tomorrow will bring the latest US jobless claims. On Friday, the US NFP report and University of Michigan consumer sentiment survey will cap the week.