Gold Down Over 8% Year-to-Date: Midterm Elections Could Be a Turning Point
nashnova research
Spot gold has fallen from its record above $5,500/oz in January to below $4,000, down over 8% year-to-date and nearly 30% off the peak; whether the midterm elections can rebuild gold's safe-haven narrative is now the central bull-bear divide.
Why has gold fallen this hard?
Three forces are pressing gold simultaneously: rising real yields reduce the appeal of a zero-coupon asset; the dollar keeps strengthening; and the AI investment boom is pulling capital toward risk assets.
This means → gold has lost on all three fronts — the rate comparison, the currency comparison, and the flow of funds — at the same time.
Rising oil prices are pushing up inflation expectations, yet markets are choosing high-yield government bonds over gold — even the traditional "inflation hedge" argument has temporarily stopped working.
How could the midterms become a turning point?
Polls show Democrats likely to win the House; the Senate majority remains uncertain. A split Congress would slow legislation to a crawl.
In plain terms = once the two chambers deadlock, neither side can push through major fiscal bills, and the deficit problem just sits there.
Matt Miskin, co-chief investment strategist at John Hancock Investment Management, argues that if 2027 tracks 2019, gold's current weakness may reverse — gold staged a notable rally that year.
Miskin sees a split Congress as reducing the risk that fiscal policy pushes real yields even higher. He has begun adding gold near $4,000, with positioning close to neutral-to-slightly-overweight.
Is the fiscal deficit bullish or bearish for gold?
Anthony Saglimbene, chief market strategist at Ameriprise, notes that regardless of Congress's makeup, America's roughly $2 trillion fiscal deficit will persist.
This reflects an unusual two-way tension: deficits push yields higher → gold suffers as a zero-coupon asset; yet surging yields themselves signal worsening fiscal stress → gold could re-emerge as an alternative store of value to the dollar.
In plain terms = the same fact can hurt gold or help it — the question is whether markets fear "high rates" first or "America can't pay its bills" first.
Why is the AI boom the key variable?
Roger Aliaga-Díaz, head of global portfolio construction at Vanguard, calls the AI capex boom one of the strongest investment cycles in decades — unlikely to stop abruptly.
This means → as long as AI keeps absorbing capital, risk assets will outcompete gold for fund flows, making it hard for the safe-haven narrative to stick.
Aliaga-Díaz adds that large deficits do not automatically help gold — if the Fed maintains credibility and is willing to raise rates to contain inflation, fiscal expansion translates into higher yields, not a loss of dollar confidence.
What should investors watch next?
Whether gold can rebuild its safe-haven case after the election depends on three converging variables: whether Congress truly splits, whether AI capex sustains, and how the Fed balances inflation against growth.
Doug Daly, portfolio manager at CoreCommodity Management, says he has turned more bullish since gold broke below $4,000, though his current positioning still tilts toward energy and Middle East geopolitical risk.
Put simply = $4,000 is a psychological line — below it, more investors start thinking "enough is enough," but the real direction won't be confirmed until the election results and the Fed's next signal.
市场有风险，内容仅供研究参考，不构成投资建议。