US Midterm Results Drive Gold Rally and Oil Slump
Democratic gains in the US midterm elections triggered a gold price rally in India and lowered oil prices amid hopes for Middle East conflict resolution.
The 2026 US midterm elections, which saw the Democratic Party take control of both the House and Senate, triggered a rally in gold prices and a slump in oil. In India, 24-karat gold rose 2.26% to ₹14,280 per gram ahead of the Dhanteras festival, supported by a weaker US dollar and lower Treasury yields. The India Bullion & Jewellers Association subsequently raised its sales growth estimate for the festival to 12% year-on-year.
President Donald Trump acknowledged that the war in Iran contributed to Republican losses. This political shift created tentative expectations for the resolution of conflicts in the Middle East, which contributed to the decline in oil prices. By November 5, gold prices stabilized at $4,063 per ounce after the initial rebound.
Market analysts suggest that sustained low oil prices may reduce pressure to raise interest rates, further increasing the appeal of gold. Additionally, perceived political gridlock in the United States is driving geopolitical fragmentation, prompting central banks and institutional investors to use gold as a reserve asset to hedge against sovereign credit risks and erratic policymaking. However, some analysts warn that a reduction in geopolitical tensions could eventually erode the safe-haven premium for gold, while Democratic scrutiny of AI and data-center expansion may impact industrial demand for silver.
