Kevin Grady, president of Phoenix Futures and Options, pointed out that if the new Democratic Congress wants to raise funds to implement its spending plan, it will be difficult to stop the expansion of artificial intelligence computing power infrastructure. Large-scale fiscal spending may suppress the dollar's trend in the long term, opening up room for gold to rise. He also gave his judgment on the interest rate path, short-term data trading logic, and the situation in the Middle East.

The midterm election results exceeded expectations, and AI policy may see a compromise or shift.

Grady stated that the market's initial reaction to the midterm election results surprised him. He said, "The market had previously experienced a sharp drop, and the subsequent rebound was unexpected. This rebound actually amplified the subsequent selling pressure." In his view, some calls within the Democratic Party to postpone data center construction are short-sighted. As economic realities gradually emerge, such hardline stances are likely to soften. He explained that the relevant policy stance has changed, with the authorities stating that approved projects can continue to proceed, covering ongoing construction plans for 2027-2028. The Democratic Party plans to implement several new policies, which require stable fiscal revenue as support. After calculating their income and expenditure, they will eventually realize that restricting data center construction will directly result in the loss of this tax revenue source. Subsequently, all parties will likely negotiate a compromise and find a middle ground.

Non-farm payroll data supports expectations of interest rate hikes; trading based solely on monthly data is not recommended.

Regarding last Friday's jobs report, Grady predicts the Federal Reserve will continue to raise interest rates. He said, "Interest rates will continue to rise. This non-farm payroll data solidifies the basis for rate hikes. The Fed will continue to test the waters until it finds a suitable interest rate level. We can wait for the probability changes in the CME Group rate watch tool after the data update. A new round of rate hikes is highly likely, and Warsh is also demonstrating a neutral policy stance." However, he also cautioned traders against relying too heavily on single-month economic data to bet on market movements. He said, "I don't agree with the idea of directly judging market trends based on monthly data. Many traders simply assume that a certain data release will cause gold to rise or fall accordingly. I don't agree with this logic. Compared to short-term monthly indicators, the market should focus more on long-term trends."

The situation in Iran presents two possible scenarios, with fiscal plans foreshadowing a weakening dollar.

Regarding the situation in Iran, Grady believes the midterm election results present two possibilities. He said, "On the one hand, the parties involved can use this opportunity to reach an agreement; on the other hand, with two years to spare, it's possible to continue applying pressure and restrictions on Iran, resisting opposition from the Democrats." Grady further emphasized that the policy agenda proposed by the new Democratic Congress comes with high fiscal costs. Once implemented, the massive fiscal spending will drag down the dollar and benefit gold. He said, "Even implementing just one-third of the plan will put enormous pressure on the dollar, which, from a long-term perspective, is a positive logic for gold." He added that this is a long-term logic and the core reason why many funds are currently investing in gold, which can build a support floor for gold prices.

Conclusion

In summary, given the constraints of fiscal funding needs, it's unlikely that the Democratic Party will completely halt the construction of AI data centers, and their policies will most likely compromise. Coupled with continued expectations of interest rate hikes and potential large-scale fiscal expansion, the long-term narrative of a weakening dollar is gradually taking shape, providing a bottom support for gold. Investors need to look beyond single-month data and grasp the main trends in asset prices from a long-term perspective. US Dollar Index Daily Chart Source: FX678 Beijing Time, November 9, 11:16 AM: US Dollar Index at 102.16.