On November 4, gold prices experienced a rollercoaster session. After a modest rebound at the Asian open, the metal began to retreat and, as expected, dropped below the 3900 level during European hours. However, a rapid rally in the US session erased all of the day's earlier losses and pushed prices back to the 3970 mark. The gains could not be sustained, though, and gold ultimately closed at 3930, forming a small bearish candle on the daily chart.
On Wednesday (November 4), US media has already projected that the Democratic Party will retake the House of Representatives. What does this mean for gold? Historical statistics covering midterm election cycles from 1978 to 2022 show that gold rose in 83.3% of the 180-day periods following midterm elections, with an average gain of roughly 6.4%. In a divided Congress scenario, the probability of a gold rally rises to 100% with an average gain of 9.3%. The rationale is straightforward: a divided Congress makes large fiscal stimulus difficult to pass, which suppresses long-end interest rates and term premiums, creating a favorable backdrop for gold.
On the other hand, if the Senate changes hands, confirming Federal Reserve governors becomes more difficult, reducing political interference in the Fed and restoring its independence, which is a neutral-to-bearish factor for gold. This is therefore a slow-burning bullish catalyst, not something to expect to materialize tonight. It is a long-term pattern that cannot dictate today's short-term fluctuations.
What the market is trading today is whether the results can be smoothly confirmed, not who wins. Do not bet on party colors in advance. Additionally, oil prices rebounded yesterday after Iran said US-Iran talks lacked persuasiveness, bringing geopolitical tensions back to the fore, which also provides some support for gold.
From a technical perspective, gold faces continued resistance near 3970 during the day. If it breaks above that level, there is some additional buffer room, with the 3990-4000 zone being the next battleground. A sustained break above 4000 would open the door to a possible trend reversal. If prices remain capped below that level, the bias stays bearish. On the downside, the 3915-10 area is the first zone to watch. If gold falls back below 3900 during the session, the medium-term downtrend may arrive earlier than expected.
In short, who wins the midterm elections matters less than how the market interprets the outcome once it is confirmed. Tonight's ADP report is the appetizer ahead of Friday's nonfarm payrolls data. Expectations lean bullish, so a range-bound long position could be considered. For the more cautious, reducing exposure by one notch between Thursday's late session and Friday's NFP release, and going into the weekend with a lighter position, is more valuable than any technical trick.
For intraday trading, the recommendation is: go long on gold at 3928-3930, with a stop loss at 3915, targeting the 3980-4000 area, and hold if it breaks higher. If gold breaks below 3915, go short targeting the 3880-3850 area.
Key economic data and events to watch today, Wednesday, November 4, 2026: at 21:15 US October ADP employment change; at 21:30 US September trade balance; at 21:30 the US Treasury releases its quarterly refunding announcement; at 22:45 US October S&P Global services PMI final reading; at 23:00 US October ISM non-manufacturing PMI.
Comments