Polymarket data indicates a 93% probability of a Democratic victory in the House and a 65% chance for the Senate. Analysts from the World Gold Council suggest that a Democratic majority could influence fiscal policy, war funding, AI regulation, and the use of executive powers.
Regarding fiscal policy, a potential legislative gridlock could limit deficit-expanding bills. While smaller deficits might strengthen the dollar and weigh on gold, reduced tariffs could widen the deficit and support the metal. Historically, the S&P 500 has trended upward following midterm elections since 1970.
Energy markets remain sensitive to geopolitical tensions, with Brent crude trading near $114. A Democratic Congress might restrict war funding, potentially lowering oil prices and easing inflation. Bitcoin, currently trading at $79,894, has shown intraday volatility of 2% to 5% in response to Iran-related headlines.
AI policy remains a point of contention, with potential for stricter regulation or reduced federal support under a Democratic majority. Such measures could negatively impact tech stocks and broader consumer spending. Meanwhile, gold prices recently fell below $4,000, trading at $4,010.48 on Monday.
Uncertainty surrounding executive orders and potential legal challenges may increase political risk premiums, which historically benefits gold. For the cryptocurrency sector, regulatory frameworks currently depend on the SEC and CFTC, meaning future executive actions could significantly alter the existing rulebook.
