US Midterms: What Could Move the Dollar and Gold?

The US midterm elections take place today, November 3. Beyond the political headlines, traders are watching one key question: could the result change the outlook for the US dollar and gold?

The main issue is government spending. Different election outcomes could affect how easily the Trump administration passes its policies, how much the government borrows and where Treasury yields go.

What Are the Institutions Watching?

T. Rowe Price sees a divided government as potentially supportive for the US dollar and negative for precious metals, as it could reduce the likelihood of major policy changes.

The World Gold Council takes a different angle. It believes that greater political friction, uncertainty over US fiscal policy and possible changes to AI regulation could support gold.

UBS, meanwhile, expects the election to have a limited impact on the broader market direction. It sees inflation, economic growth and interest rates as more important drivers.

What Should Traders Watch?

The first reaction may come from the US dollar and Treasury yields as election results emerge.

For USD traders, stronger Treasury yields could provide support for the dollar, while falling yields may add to selling pressure.

For gold traders, the relationship often works in the opposite direction: a weaker dollar and lower yields can make gold more attractive, while a stronger dollar and rising yields may weigh on prices.

The election may set the tone, but Treasury yields and the dollar will help show whether the move has staying power.