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Gold Price Prediction – Gold Slips Following Mid-Term Elections

By:
David Becker
Published: Nov 7, 2018, 20:46 UTC

Gold prices slumped during the session forming a doji day which is generally a sign of indecision.  Prices attempted to move higher following the mid-term

Comex Gold

Gold prices slumped during the session forming a doji day which is generally a sign of indecision.  Prices attempted to move higher following the mid-term election results but as the session moved on, riskier assets surged easing the demand for the yellow metal. As most expected the Democrats are now in control of the House of Representatives, which will likely generate gridlock which is generally good for riskier assets.

Technical Analysis

Gold prices moved sideways initially attempting to test resistance and then falling back to the lower end of the range, and testing short-term suport.  A break of the October highs at 1,239 would lead to a test of the July highs at 1,265.  Support on the yellow metal is seen near the 20-day moving average at 1,225. Momentum is neutral as the MACD (moving average convergence divergence) histogram prints near the zero-index level with a flat trajectory which points to consolidation. The fast stochastic generated a crossover sell signal which reflects accelerating negative momentum.

Democrats as anticipated took control of the House of Representatives, while Republicans retained and expanded their control over the Senate, while Democrats gained fewer governor seats than initial expectations.  The Democrats had a very strong showing in suburban districts to win control of the House of Representatives for the first time in 8-years, though the Trump administration lost fewer seats than Obama did at his first mid-term. The Democrats needed a net gain of 23 seats to win the House and wound up netting 35 seats. The issue for the white house is less that the Democrats will generate a stalemate, and more that they have subpoena power and will likely generate significant investigations related to Russia. In addition, attorney General Jeff Session resigned on Wednesday as requested by the President. There is definitely a concern that the Mueller investigation is now in the crosshairs.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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