Gold and the greenback are still at the mercy of Trump and the Fed – Walsh Trading's Weyer

The decisive midterm election result removed some market uncertainty, but John Weyer of Walsh Trading said it does not affect Federal Reserve policy. The dollar and gold remain dependent on the Fed and the President, with precious-metals traders awaiting the Fed's December decision.

Analysis

The low-information election result is unlikely to sustain a directional move in gold or the dollar by itself: any reduction in political-risk premium can be overwhelmed by repricing of real rates and the Fed’s reaction function. The key transmission is real yields—falling real yields tend to support gold and weaken the dollar; rising real yields do the reverse. A decisive result may also shift attention toward fiscal expectations, but it does not establish a change in spending, deficits, or Treasury supply, so avoid trading that second-order channel before policy details emerge.

Near term, expect event-risk premium to fade unless the result changes market expectations for fiscal policy. Over the next 1–3 months, Fed communication and incoming inflation/employment data are the primary catalysts; over 6–18 months, fiscal and debt-supply expectations could matter more for the dollar and term premium. The contrarian point is that political clarity is not necessarily economically clarifying: the market may be underpricing policy uncertainty if campaign commitments later translate into material fiscal changes. Conversely, attributing gold or FX moves to the election without confirmation in real yields risks chasing noise.

Key Decisions for Investors

• No standalone election-driven position is justified on the available information. Keep directional exposure to gold and the dollar tied to real-yield signals rather than the political headline.
• Set a conditional bias: consider long GLD or gold futures against a dollar-long proxy such as UUP only if real yields turn lower and Fed pricing confirms a more accommodative path; reduce or reverse that bias if real yields rise.
• Use the December Fed decision and intervening inflation and labor-market releases as the 1–3 month catalyst set. Monitor Treasury real yields, breakevens, and front-end rate pricing for confirmation rather than relying on political commentary.
• Falsify the gold-bullish/dollar-bearish setup if real yields move higher and the dollar strengthens alongside a less-dovish Fed repricing. Reassess the fiscal-risk channel only when concrete policy proposals or issuance expectations change.