US midterm election results: Sudden USD drop lifts Gold slightly

Early US election results put the USD under heavy pressure, drawing buyers to gold on Wednesday.
Lower US bond yields add to the dollar's weakness, although geopolitical risks cushion its losses.
Expectations of a Fed rate hike restrain bullion's upside ahead of major US economic releases.

The US Dollar (USD) falls to its lowest level since late September. Gold (XAU/USD) edges higher in Wednesday's Asian session as early US midterm election results intensify political uncertainty and put the dollar under heavy pressure. Initial trends suggest the Democrats could win control of both the House of Representatives and the Senate. That raises the prospect of Washington gridlock and constraints on government spending. A Democratic sweep could also weigh on technology shares and economic growth. The resulting demand for safe-haven assets triggers another decline in US bond yields, adding to the USD's intraday slide.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Nearly 80% is the probability traders assign to another US rate increase at December's policy meeting, according to the CME Group's FedWatch Tool. These hawkish expectations for the US Federal Reserve (Fed) prevent gold from extending its modest intraday advance. Rate-hike bets strengthened after Tuesday's Labor Department Job Openings and Labor Turnover Survey, or JOLTS report, showed hiring remained relatively stable in September. Job openings increased to 7.523 million from an upwardly revised 7.190 million in August. Alongside resilient economic growth and persistent price pressures, the figures reinforce expectations of an imminent Fed rate increase. Non-yielding bullion consequently remains below the $3,970 resistance zone.

An eight-month-old US-Iran war continues to sustain the geopolitical risk premium, despite efforts to secure a diplomatic resolution. Speaking to the Financial Times on Tuesday, President Donald Trump said the US had no immediate plans to strike Iran, although Israeli Prime Minister Benjamin Netanyahu had hinted at an attack later this week. Separately, a senior Iranian official told Reuters that reopening the Strait of Hormuz would require sanctions to be waived and the US naval blockade to end. Iran's Islamic Revolutionary Guard Corps (IRGC) also reported that four tankers had been destroyed after hitting mines south of the Strait of Hormuz. These developments heighten oil supply risks and inflation concerns linked to volatile energy prices, supporting the case for further Fed tightening.

Wednesday's US calendar brings the ADP private-sector employment report and ISM Services PMI, with traders awaiting both releases. Fresh geopolitical developments could also give gold direction. The principal focus, however, remains Friday's closely watched US monthly employment figures, commonly known as the Nonfarm Payrolls (NFP) report. That release will influence demand for the USD and shape the precious metal's near-term path. Given the fundamental backdrop, a sustained break above $3,970 would be needed before confirming a bottom in XAU/USD and positioning for a meaningful recovery from last Friday's low, the weakest level since September 2025.

4-hour XAU/USD chart

$3,970: Key Technical Hurdle

At $3,947, the 23.6% Fibonacci retracement provides immediate resistance before the $3,970 zone. XAU/USD retains a bearish bias on the 4-hour chart, trading beneath the 100-period Simple Moving Average (SMA) and every key Fibonacci retracement of the decline from the mid-October highs. Momentum indicators offer tentative signs of stabilisation: the Relative Strength Index (RSI) is close to neutral at 48.94, while the Moving Average Convergence Divergence (MACD) stays positive at 6.65. Neither yet signals enough strength to overturn the prevailing bearish structure.

A sustained move above $3,970 would bring the 38.2% retracement at $3,995 into view, followed by the 50.0% retracement at $4,033. Further resistance lies at the 100-period SMA of $4,057, then the 61.8% and 78.6% retracements at $4,072 and $4,127, respectively. Beyond those levels stands the cycle high near $4,197. If selling pressure intensifies instead, the principal structural support is the Fibonacci anchor around $3,869, where buyers could try to establish a floor again.

(The technical analysis of this story was written with the help of an AI tool. Learn more.)

US midterm elections: key questions

US midterm elections: which offices are contested?

All 435 House of Representatives seats are contested in the US midterm elections. These federal elections take place halfway through a president's four-year term. Voters also elect about one-third of the Senate and, in many states, governors alongside other state and local officials.

2026 midterm elections: what is the voting date?

Tuesday, 3 November 2026 is Election Day. Under federal law, voting takes place on the Tuesday following November's first Monday. Many states already have early voting and postal voting under way.

US midterm elections: what is at stake?

The final two years of President Donald Trump's term will be shaped by which party wins control of each chamber of Congress. Midterm results determine those majorities. The party in the majority directs the legislative agenda and selects committee leaders. In the Senate, it also controls the confirmation process for judges and senior officials.

2026 midterms: is the presidency being contested?

November 2028 is the date of the next presidential election, not the 2026 midterms. A president is elected every four years. Although the presidency is not on the midterm ballot, the vote is frequently viewed as a referendum on the incumbent president's party, which has historically tended to lose House seats.

2026 midterms: what could change for the US dollar?

Most analysts anticipate only a limited, temporary US Dollar response, rather than a durable trend. A split Congress is the widely expected outcome and is already partly reflected in prices. The reaction in Treasury yields may be more pronounced. Results that increase expectations of fiscal stimulus generally push both yields and the US Dollar higher; gridlock that constrains fresh spending can depress both. Funding disputes or debt-ceiling stand-offs can briefly support the Dollar's safe-haven appeal as well. Over six to twelve months, economic growth and Federal Reserve policy carry more weight than the election result.

19 out of 19: how have stocks traded after midterms?

Since 1950, the S&P 500 has risen in the 12 months following every midterm election: 19 out of 19, with gains averaging about 15%. US equities have historically struggled before the vote and strengthened afterwards. Analysts attribute this pattern to uncertainty receding once the outcome is clear. Past performance does not guarantee future returns, and some strategists note that high valuations in 2026 could test the streak.

Split Congress: why might markets welcome gridlock?

With sweeping tax, spending and regulatory changes less likely under gridlock, markets have often responded favourably to divided government. During Republican presidencies, the S&P 500 has historically performed well in the years after midterms that leave Congress under split control. Funding deadlines, debt-ceiling disputes and congressional investigations remain risks that can increase short-term volatility.