The Quiet Before the Storm
This week could prove to be a monumental week with the midterm elections beginning tomorrow. According to Bloomberg politics, “The 2018 midterms are the most closely watched, most expensive, and most fretted-about congressional elections in memory.”
The stakes are enormous, as the outcome could determine whether the status quo remains the same or if there will be some real changes in the way Washington gets things done. According to many analysts, the Democrats are expected to take control of the House of Representatives, but not the Senate.
According to Reuters, investors are cautious ahead of the U.S. midterm elections. Opinion polls show the Democratic Party could win control of the House of Representatives after two years of wielding no practical political power in Washington, with Republicans likely to hold the Senate.
A shift of power in the House of Representatives would make the current administration’s ability to implement change much more difficult and, in some cases, impossible. This would create more uncertainty, which would be bullish for gold prices.
Add to that the FOMC meeting which will begin on Wednesday and conclude on Thursday. Although it is widely anticipated that interest rates will remain the same this month and adjusted in December, one can never be entirely sure.
That being said, market participants will most certainly search through the statement released immediately following the conclusion of the meeting for insights as to the current temperament of the Federal Reserve members. Traders and market participants will attempt to determine if recent volatility in the U.S. equity markets will change their current timetable in regard to interest rate hikes.
Currently, December Comex gold futures are trading fractionally lower on the day, down $0.30, and fixed at $1,233 per ounce. Spot gold is presently fixed at $1,230.50 which is a net decline of $1.70 on the day. Today’s net decline is due to traders bidding the precious yellow metal lower by $3.80, and dollar weakness adding $2.10 in value, this according to the KGX (Kitco Gold Index).
Wishing as always, good trading,