Gold prices surged and Wall Street stocks rallied on November 4, 2026, following the Democratic Party's sweep of both chambers of Congress in the US midterm elections. The US dollar, however, dipped as investors weighed the implications of a political gridlock in America on the global economy. A Democratic-controlled Congress is expected to limit President Donald Trump's plans for further fiscal stimulus, potentially slowing economic growth and reducing the need for additional interest rate hikes by the US Federal Reserve.
Spot gold climbed more than 2% to US$4,138 an ounce after the midterm results were announced, recovering from a recent drop below US$4,000. Analysts noted that despite the recovery, gold is still down more than 4% this year. Zavier Wong of etoro cautioned that expectations of another Fed rate hike in December could limit further gains in gold, with the upcoming US jobs report on November 6 likely to influence its outlook. Oriano Lizza of CMC Markets Singapore predicted gold could reach US$4,500 in the coming months and exceed US$5,000 by the end of 2027.
The US dollar fell to a one-month low, with the dollar index dropping 0.24% to 101.24. Ninghui Liu of State Street Investment Management attributed this to improving investor sentiment post-midterms, reducing demand for the US dollar as a safe-haven currency. However, he cautioned that the strength of the US economy and expectations of further Fed rate hikes could support the dollar's strength. CMC’s Lizza expects the US dollar index to return to around 102 by the end of 2026 and strengthen modestly through 2027.
Equities saw a mixed reaction, with the S&P 500 rising 1.58% to 7,688.62 points, the Nasdaq gaining 1.44% to 25,736.51, and the Dow Jones Industrial Average jumping 3.03% to 53,356.12. Semiconductor stocks, however, bucked the rally, with the iShares Semiconductor ETF falling 3.14%. Asian markets ended mixed, with South Korea’s Kospi falling about 5.28% and Japan’s Nikkei 225 declining 1.79%, while Hong Kong’s Hang Seng Index rose about 3.67% and Singapore’s Straits Times Index edged up 0.52%.