Wagers Favor Democrats in Midterms; What It Means for Gold, BTC, Equities

Voters on both sides are anxious about the opposing party controlling Congress, according to a CNBC survey. For investors, a Democratic majority could alter the outlook for oil, artificial intelligence, and policy risk.

On Polymarket, Democrats are assigned a 93% probability of taking the House and a 65% probability of taking the Senate. A new World Gold Council analysis lays out four policy areas that a Democratic Congress might influence, all with potential consequences for gold, Bitcoin, and equities.

Spending Gridlock: Help or Hindrance for Gold?

The first area is federal spending. The WGC sees a Democratic Congress constraining the White House's ability to push through deficit-expanding legislation. Edward Jones also thinks gridlock would make large fresh fiscal measures less likely.

• Gold might face conflicting forces. Smaller deficits could calm fiscal worries and revive appetite for Treasuries and the dollar, which tends to pressure gold. Yet tariff-reduction pressure could reduce government revenue and enlarge the deficit, possibly aiding the metal.
• Stocks: Falling Treasury yields could lift shares by lowering borrowing costs and raising the present value of future profits. Edward Jones data also indicates the S&P 500 has typically climbed after midterm elections since 1970, no matter which party emerged victorious.
• Bitcoin (BTC) generally moves in the opposite direction from the dollar, and Glassnode data shows that inverse correlation is at its most negative reading on record. A stronger dollar caused by smaller deficits would thus be a drag on BTC. The relationship has occasionally loosened, though.

Might Lawmakers Cool the Iran Trade?

War funding is the second policy area, and it connects the election outcome directly to oil. In the CNBC survey, 21% of Democratic voters say they fear a Republican Congress would keep military operations going in Iran. Meanwhile, 11% of Republicans worry that Democrats would halt them.

Trump has recently ruled out any near-term military action against Iran. The council's view is that a Democratic Congress could hold back war funding and steer policy toward de-escalation.

For now, the oil market is signaling the opposite. Brent crude is around $114, and rising energy expenses have stoked inflation worries. Traders are pricing in roughly an 80% chance of a Federal Reserve rate hike in December.

• Gold would get a lift from de-escalation, per the council, because cheaper oil would soften inflation expectations, yields, and the dollar. The metal slipped under $4,000 on Friday, marking its weakest level since mid-July, and changed hands at $4,010.48 on Monday.
• Stocks would rise if lower oil prices reduced yields and inflation anxiety.
• Bitcoin has been volatile on Iran headlines this month, with escalation reports shaving 2% to 5% off its price intraday. A deal that undermines the dollar could offer support. BTC is now at $79,894, down 1.2% over the past 24 hours.

Might AI Rules Land First on Tech Shares?

AI regulation is the third area. A Democratic Congress, the council says, could pull back federal backing for artificial intelligence or impose stricter oversight.

The CNBC survey shows 19% of Democrats concerned that a Republican Congress would not regulate AI and data centers. On the Republican side, 6% worry that Democrats would go too far in regulating them.

• Gold might benefit from such a slowdown, since softer growth, lower yields, and a weaker dollar would be supportive.
• Stocks, technology shares especially, would suffer the most direct damage, in the council's view. Investors are already questioning whether hyperscaler spending will generate returns. A decline in tech stocks could then hurt household wealth and consumer spending.
• Bitcoin could see opposing pressures. A weaker dollar would be beneficial, but a tech sell-off might pull BTC down along with equities.

If the White House Rules by Order, What Then?

Executive power is the final area, and it is already on voters' minds. In the CNBC survey, 44% of all voters fear Trump acting beyond his constitutional authority, a view held by 74% of Democrats. Among Republicans, 16% fear that a Democratic Congress would seek his impeachment.

The council expects legislative gridlock to push the administration to lean on executive orders and emergency powers. The legal battles and policy shifts that follow could lift political risk premiums.

• Gold tends to gain from such uncertainty, according to the council. It also expects those conditions to boost central banks' desire to diversify reserve holdings into gold.
• Stocks may weaken as policy becomes harder to predict, a factor that usually pressures valuations.
• Bitcoin has its own executive-power exposure. Most of today's crypto rulebook comes from the SEC and the Commodity Futures Trading Commission (CFTC), not from lawmakers. A future commission could reverse those rules.

In the council's assessment, three of the four areas tilt in gold's favor. For Bitcoin, the dollar is the connecting factor, and stocks depend mainly on yields. Polymarket continues to put Republicans' chances at 8% for keeping the House and 36% for retaining the Senate.