Gold futures surged $135, or 3.35%, on November 4th following the Democratic Party's sweep of both the House and Senate in the US midterm elections. This marked the largest single-day gain since gold broke below $4,000 in late September 2025. The rally raises questions about whether this political shift can reverse gold's multi-month correction, especially with the Federal Reserve still expected to raise rates next month.
The precious metal had tumbled $1,600, or 40%, from its all-time highs in March to October. While shorter-term charts suggest a parabolic correction, longer-term views show gold had not posted a monthly loss since December 2024. The market's euphoria peaked in February with a record close near $5,300, only to plunge in March after a US-Israeli airstrike killed Iran's Supreme Leader Ali Khamenei and his family.
The strike inadvertently installed Mojtaba Khamenei as Iran's new leader, escalating geopolitical tensions. Iran responded by disrupting key oil transport corridors, fueling inflation and uncertainty. Gold's recovery now hinges on whether the Democratic-controlled Congress can persuade the President to end the conflict. Markets see an improved chance of a resolution, though no final verdict has been reached.
The outcome depends on how effectively Democrats can influence the President's war strategy. While the rally offers hope, the path forward remains uncertain as traders weigh political developments against persistent economic headwinds.