Gold weighing down rallies, Midterms loom
Gold (XAUUSD) has been trying to break up out of its slight downward channel since the end of August, and with every failure the roof descends a little more, not unlike a scene from an Indiana Jones movie. In the last week it has tried four times to rally above $1210/20 and has failed on each occasion. While the downside has also held up relatively well it is difficult to escape the feeling that there is more scope for a further slide. The Dollar index is starting to look a bit fragile, as are European equity indices, and with US Treasury Bond yields perking up the stage appears to be set for a little turbulence ahead. Unfortunately the US midterm elections look to be the trigger for another more vicious political campaigning, largely fuelled by the Trump’s opponents, many of whom still haven’t managed to come to terms with Donald Trump’s Presidency. The divisions between Democrat and Republicans have never been in sharper relief, nor more finely divided, and voter turnout is likely to be high as tribal affiliations galvanise support for each side, bringing an added significance to these elections. Markets dislike uncertainty, and there will be plenty of that ahead until the outcomes are clearer after the November 6 voting.