Gold Rallies on Democratic Sweep, but Can It Last?

On November 4th, the US midterm elections gave Democrats a majority in both the House and the Senate. That same day, gold futures rallied $135, or 3.35%. It was the largest single-day advance since gold fell to 13-month lows and broke below $4,000 for the first time since it closed above that level in late September 2025. With the Fed still expected to raise rates next month, can this political shift pull gold out of a multi-month correction and convince traders to pivot from bearish to bullish sentiment? That is the question we will try to answer today.

First, we have to ask ourselves: what forces took gold from its euphoric all-time highs at the beginning of the year to a depressing decline of $1,600, or 40%, over the seven months from March to October?

A market technician knows that a parabolic rise precedes a parabolic fall, and traders have the 1979 and 2011 rallies in precious metals as a reference for how gold should react after a parabolic advance.

Put simply, every parabolic rally in gold and silver has been followed by a parabolic correction.

From a technical standpoint then, gold and silver were both late for their appointment with a steep and sudden correction at the start of this year.

However, when we look through the lens of a monthly or even weekly time frame, gold was not behaving like a market that had exhausted its upside momentum.

On the monthly candlestick chart, gold futures had not printed a single red candle since December 2024, when gold gave up a meager $34.

In January of this year, gold posted its largest monthly dollar gain ever, $575.

This was the paradigm shift in gold as it relates to geopolitical uncertainty and inflation.