December Gold:  Open= 621.5  High= 626.8   Low=617.8   Close= 618.3   Change: -9.4

Historical standards held true in the 2006 elections, swinging power towards the Democrats. 

In congressional races, Democrats picked up 27 seats in the House and 5 in the Senate, almost spot on to previous second mid-term elections.  Power in the Senate hangs between 50-50 or 49-51, depending on the outcome of the Virginia race.  Either way, the Republicans have taken a drubbing nationally.  To put into perspective, Republicans had lost only 9 seats in the House in the past twelve years.  What effect did this have on the gold market?

Very little, in terms of real impact.  In the short term, however, a bout of profiting taking led the way lower, starting with a gap lower on the open.  The elections have dominated the press for the past few days and a few more will be devoted to digesting this change.  During that time, expect gold to trade choppy and lower in a consolidative mode.

Gold is likely to continue its path higher, it’s just a matter of it correcting first or breaking solidly above $630.  The correction came first.  Weakness should be bought at this time.  Support at $620 proved too shallow, leaving $612 and $610 as support.  $600 could be the bottom of this range, giving the latest run up a 50% pullback. Resistance is seen at $620, $627, and $630.

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