International News
Gold near fresh all-time highs ahead of US trading session
Gold’s price (XAU/USD) is seeing gains tick up trading near $2,952 at the time of writing, fueled by a weaker US Dollar (USD) and softening US yields in a reaction to the recent German federal election outcome. Although the far-right party Alternative for Germany (AfD) has gained 20% of votes, the Christian Democratic Union of Germany (CDU) is comfortable in the lead with 208 seats against AfD’s 152. US yields dropped off and the CME Federal Reserve (Fed) Futures are now favoring a 25 basis points (bps) rate cut in June, where last week odds were rather for no rate cut in June.
Meanwhile, traders will watch the US Gross Domestic Product (GBP) release for the fourth quarter of 2024 later this week. Given the recent slowdown in US activity and economic data (for example, the softer Services Purchase Managers Index (PMI) reading on Friday), another drop in US yields could be triggered, with markets anticipating the Federal Reserve lowering its monetary policy rate to boost the economy and demand. The US dollar weakened after several reports and economic data points last week revealed that US business activity slowed and consumer confidence waned, with expectations for inflation surging and markets pricing in more rate cuts by the Federal Reserve this year.
International News
Democrats Win In Midterm Polls Could Significantly Lift Industrial Demand For Silver
World Gold Council Data Going Back To 1970 Show Gold Rising 62% Of The Time In The Six Months After A Midterm, With A Median Gain Of Just 2%,
· Midterm Election Snapshot: Americans are voting for 435 House seats, 35 Senate seats, and 36 governorships. Forecasters expect Democrats to win the House (~90% chance), while the Senate remains a toss-up driven by voter concerns over inflation, tariffs, and the Iran conflict.
· Government Gridlock: A Democratic House would constrain President Trump’s agenda, leading to potential gridlock over spending and taxes.
· Impact on Precious Metals: Election outcomes matter to gold and silver mainly through their impact on Treasury yields and the US dollar. Silver enters the vote under weaker pressure, while gold holds up better.
· Historical Pattern: Since 1970, gold rises 62% of the time in the 6 months following a midterm, with a median gain of 2%—though past patterns are not guaranteed to repeat in 2026.
· National Debt Factor: A full Democratic sweep (“blue sweep”) could focus trader attention on the $40.5 trillion national debt ($120,000 per US citizen), which could eventually boost investment demand for both metals.
· War & Geopolitics: Funding for the 250+ day conflict with Iran would face heavy resistance in a Democratic Congress. An earlier end to the conflict would help gold and silver regain their traditional safe-haven status.
· Industrial Boost for Silver: Democratic policies prioritizing social infrastructure and green energy legislation would significantly lift industrial demand for physical silver, potentially aiding its effort to break back above the historic $50 mark.
· Interest Rate Risks: Higher federal spending could widen deficits and weaken the dollar (bullish for metals), but higher real interest rates and elevated Treasury yields could weigh on gold more than silver.
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