Market Participants Wait With Baited Breath
Traders and market participants are quietly waiting to hear results from today's midterm elections. In possibly one of the most important midterm elections held in recent history, the net results could have a profound impact.
This election will determine whether or not the current administration and the Republican-led House and Senate will continue to have total control resulting in the ability to move President Trump's agenda and policies into law, at a breakneck pace.
As reported in Reuters, "Americans will head to the polls today to determine whether or not Trump's Republicans will maintain their grip on the U.S. Congress, or if Democrats can slow the president's agenda after a divisive campaign marked by clashes over race, immigration and trade.
This election will determine who will control the House of Representatives as well as the Senate. Many analysts believe that there is a low probability that the Democratic candidates will be able to have enough votes to gain control of the Senate. However, they are forecasting that the Democrats have a good chance of taking enough seats in Congress to control the House of Representatives.
Jim Wyckoff of Kitco news wrote, "Many believe today's U.S. vote is a referendum on the performance of President Donald Trump. Big gains by the Democrats would likely be initially bearish for the U.S. stock market and would signal gridlock in Congress the next two years."
If the Democrats score big gains, the downside pressure it would exert on the U.S. equities markets as well as the gridlock in Congress would definitely have a bullish influence on gold prices. It would create uncertainty which in and of itself has historically been the catalyst for gold pricing to move higher.
A bearish U.S. equities markets would certainly influence the Federal Reserve in terms of their pace and goal in taking interest rates to what they believe are normal. Currently it is highly anticipated that there will be one more interest rate hike this year, which will occur in December immediately following the conclusion of the FOMC meeting.
Currently, gold is trading off by five dollars on the day and is fixed at $1227.40. Election results will not begin to be tallied until this evening and based upon the results of the election we could see gold dramatically gain or lose value.
If the Democrats effectively gain control of the House of Representatives, we could easily see a $10 or $15 spike higher in gold. If the status quo remains the same, meaning that the Republican Party continues to control both the House and the Senate then we could see gold trade lower.
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Wishing you as always, good trading,
By Gary WagnerContributing tokitco.com
Follow @garyswagner
gary@thegoldforecast.comwww.thegoldforecast.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.  |