Price of Gold Fundamental Daily Forecast – Look for Safe-Haven Buying if Republicans Lose Power

Gold prices are edging higher on low volume early Tuesday in reaction to slightly lower U.S. Dollar, weaker stock prices and softer Treasury yields. Most of the price action is being fueled by position-squaring ahead of the U.S. mid-term elections, the outcome of which could dictate U.S. economic policy for the next two years.

At 1008 GMT, December Comex Gold is trading $1235.30, up $3.10 or +0.24%.

Traders are bracing for volatility in the financial markets as the election results are released later today. Extreme stock market or U.S. Dollar weakness could drive investors into gold because of its safe-haven qualities.

This election is unusual because a decisive win by either party is widely expected to create a hostile, volatile situation in the financial markets.

A win by the Republicans means the Trump administration will continue with its economic plans. These plans are considered pro-growth which likely means higher stock prices and rising interest rates. Because of this, the U.S. Dollar is likely to be in strong demand which should be detrimental to gold prices.

A victory by the Democratic Party is likely to mean slower growth. With the Democrats in control, Trump’s tax cuts could be rolled-back. He could face pressure to relax his tariffs. Government spending may increase. This could trigger a steep drop in the stock market, leading to increased demand for safe-haven gold.

Forecast

Shortly before the voting begins on Tuesday, opinion polls show strong chances the opposition Democratic Party may take over the House after two years of wielding no practical political power in Washington due to Republican control. The Senate, however, is expected to remain under the control of the Republican Party.

In other news, traders will get the opportunity to react to the latest data from the JOLTS Job Openings report. Last month, it showed a whopping 7.14 million openings. IBD/TIPP Economic Optimism is forecast at 59.2. The U.S. Treasury is also holding at 10-year bond auction.

We’re not looking for too much action today unless investors want to speculate on the on-going polls instead of waiting for the election results to start coming in about midnight GMT.