Will gold prices rise in 2027? Analysts reveal that "this price" is critical and may reverse to as low as $2,500

Spot gold is testing initial resistance at $4,000 an ounce. (Reuters)

[Financial Channel/Comprehensive Report] Under the dual stimulation of the announcement of the results of the US midterm elections and the sharp weakening of the US dollar, the price of gold has strongly stood above the US$4,000 mark. Foreign media reported that spot gold was testing the initial resistance level of US$4,000 per ounce, with an increase of about 2.5% that day. As the voting results are announced one after another, if the Democratic Party controls both the House and Senate of Congress, it may lay the foundation for further rise in gold prices in 2027.

However, some analysts have different views and believe that the 4,000 level is very important. Michele Schneider, chief market strategist at MarketGauge, warned that gold's safe-haven appeal may have weakened, and investors have recently turned to U.S. Treasuries instead. She believes that gold prices must regain US$4,000 to regain bullish momentum; if it falls below the US$3,940 support level, it may further drop to US$3,500, or even fall to US$2,500 in extreme cases.

As of 15:44 pm Taipei time on Wednesday (4th), spot gold was trading at US$4,026.73 per ounce.

The report pointed out that the U.S. midterm elections affected global financial markets. As the Democratic Party gained control of both houses of Congress, the U.S. dollar weakened and gold prices rebounded. Spot gold once challenged the $4,000 per ounce mark. Does the Democratic victory mean that gold will usher in a new wave of gains?

"Kitco News" quoted Christopher Vecchio, director of futures and foreign exchange strategy at Tastylive, as saying that the Democratic Party's control of Congress may create resistance to the technology industry, especially AI infrastructure and data center investment that support U.S. economic growth. If the construction of data centers slows down, corporate investment may decline simultaneously in the next three to six months, which will drag down the economy and change the direction of the Federal Reserve's (Fed) monetary policy.

He believes that once corporate investment decreases, the Federal Reserve may not have to raise interest rates, and real yields may also decline. Since gold itself does not yield interest, the decline in the U.S. dollar and real yields will reduce the opportunity cost of holding gold, which will help gold prices regain their upward momentum. The related impact may last until the first quarter of 2027.

However, Vecchio reminded that the Democratic Party’s victory does not mean that geopolitical risks will subside immediately. The new Congress will not take office until January next year. Trump still has time to promote other policies, and the uncertainty caused by the Iran war still exists.

Jen Bawden, founder of Bawden Capital, believes that what really affects the long-term trend of gold is the continued deterioration of the financial situation in the United States. Whichever party is in power has yet to come up with a convincing solution to the debt. The continued expansion of fiscal deficits and interest payments may force the Federal Reserve to eventually loosen monetary policy and weaken the purchasing power of the U.S. dollar. However, a stronger U.S. dollar and high interest rates may still suppress gold prices.

Chris Weston, director of research at Pepperstone, pointed out that the size of the congressional majority won by the Democrats may be more important than winning the election itself. If Trump's domestic policies are restricted, the government may turn to tougher international policies, increasing market demand for safe havens.

However, Michele Schneider, chief market strategist at MarketGauge, warned that gold's safe-haven appeal may have weakened, and investors have recently turned to U.S. Treasuries instead. She believes that gold prices must regain US$4,000 to regain bullish momentum; if it falls below the US$3,940 support level, it may further drop to US$3,500, or even fall to US$2,500 in extreme cases.