Gold is back above $4,000 an ounce, and it got there fast. The metal jumped more than $100 intraday after Democrats won control of both Congress and the House of Representatives in the midterm elections. That political shift sent the U.S. Dollar Index down about 0.38% and pulled Treasury yields lower, making it cheaper to hold bullion, which pays no yield.

But don't pop the champagne just yet. Monetary policy is still working against the rally. The CME FedWatch tool shows markets pricing in an 83.2% probability of a Federal Reserve rate hike in December. That keeps bond yields front and center ahead of Friday's non-farm payrolls report.

Washington Gridlock and ING's Global Playbook

ING had expected gridlock before the vote. "Clean sweep or not, Washington is heading for divided government," ING economist James Smith wrote. "That sounds like a recipe for inaction."

With Democrats now holding both chambers, the Trump administration's domestic fiscal and tax agenda faces maximum resistance. That reality leaves little room to cut the deficit.

"America's fiscal trajectory looks ugly on almost every metric," Smith wrote. He noted that the federal deficit is around 6% of GDP "and there is little evidence of appetite in Congress for meaningful consolidation."

Gridlock could push the White House toward powers it can use on its own. "Trade is another power the president can wield unilaterally without Congress," Smith said. He pointed to the Section 301 tariff structure that replaced the emergency tariffs the Supreme Court struck down. New tariff increases could add to already persistent inflation. Smith also noted that Warsh has repeatedly said roughly half of the inflation basket is running above 3%.

Foreign policy is the other lever. ING's James Knightley has argued that a Democrat-run Congress could pull Donald Trump in two directions on Iran: emboldening him to double down while also inviting more pushback.

A clean sweep "would give the party more confidence to challenge the White House on Iran, potentially including over war-related funding," Smith wrote. That kind of friction supports demand for gold as a safe haven.

Central Bank Accumulation and the Battle for Technical Breakout

Official buying remains bullion's structural support. World Gold Council data show central banks added a net 321 tons in the third quarter. That number is up about 42% from a year earlier, bringing year-to-date purchases to 675 tons. Gold-backed ETFs like the SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) added 211 tons, taking holdings to a record 4,256 tons.

"Central banks remained an important pillar of demand as pronounced buying continued from the official sector," said Louise Street, senior markets analyst at the WGC. The council cautioned, however, that the link between buying and prices "is not sufficiently stable to imply a firm floor for the gold price."

On the daily chart, gold bounced off its recent swing low of about $3,850 to $3,900. The first notable resistance above is the falling trendline that runs from the September swing high. Above it sits $4,200 – resistance that held through October.

Until those levels clear, the latest daily close remains the lower low, classifying these rallies as pullbacks in the broader corrective phase.