Gold prices around Dhanteras and Diwali 2026 will be influenced more by the policies following the US midterm elections than by the election results themselves. According to Juan Carlos Artigas, Regional CEO (Americas) and Global Head of Research at the World Gold Council (WGC), the impact of the US elections on gold is complex and depends on several key factors.
- Fiscal policy and budget deficit changes
- Geopolitical tensions and war funding decisions
- Regulation of artificial intelligence and its economic effects
- Political stability and institutional conflicts in the US government
How does US fiscal policy after midterms affect gold prices?
The control of Congress can influence the US budget deficit, which in turn affects gold prices. A smaller deficit might reduce government borrowing and inflation concerns, lowering gold demand as a safe asset. Conversely, an expanding deficit could increase inflation worries and support gold prices. The WGC highlights that tariff pressures and fiscal policy direction after the elections are important to watch.
What role do geopolitical tensions play in gold demand?
Decisions on war funding and conflicts, such as the situation with Iran, can impact gold prices. If Democrats control Congress, they might limit war funding and encourage de-escalation, which could lower energy prices and inflation expectations. This scenario may reduce gold's geopolitical premium but also support gold through lower bond yields and a weaker US dollar. However, reduced geopolitical risks might decrease gold's appeal as a safe haven.
How could AI regulation influence gold prices?
The WGC notes that Democratic control could lead to tighter regulations on artificial intelligence, potentially weakening technology stocks. If tech stocks decline, household wealth and spending might slow, affecting economic growth. This could result in weaker equities, lower yields, and a weaker dollar, all factors that typically support gold prices. However, the overall impact depends on market responses and other economic conditions.
Why does political stability matter for gold investment?
A divided Congress could limit the Trump administration's legislative agenda, leading to increased use of executive orders and emergency powers. This institutional conflict and unpredictability may raise political and geopolitical risks, which often support gold as a safe asset. Ongoing friction between Congress and the administration could also make US foreign policy less predictable, encouraging investors and central banks to diversify reserves into gold.
The WGC also considers the possibility of Republicans maintaining control of Congress, which could create mixed effects on gold prices. Regardless of the outcome, international investors are expected to continue supporting gold demand.
What factors influence gold prices in India during the festive season?
Seasonal demand in India rises during the festive and wedding periods, including Dhanteras and Diwali. Kavita Chacko, Research Head for India at the WGC, notes that this seasonal buying is gaining momentum. Indian gold prices will be affected by international gold prices, the rupee-dollar exchange rate, and domestic demand. Thus, global policy uncertainty and local market conditions together shape gold prices in India.
In summary, gold prices after the US midterm elections will depend on fiscal policies, geopolitical developments, AI regulation, and political stability. Indian buyers should also consider seasonal demand and currency fluctuations when planning purchases during Dhanteras and Diwali 2026.
