Grady says Democratic spending plans could weaken the dollar

Grady said he was surprised by the market’s response to the midterm results, describing a rally followed by a sell-off. He called Democratic calls to halt data centers shortsighted and expects lawmakers to soften some positions as they weigh the revenue those projects could generate. He said permitted projects would be allowed to continue through 2027 and 2028, and predicted that agreements and compromises would emerge.

On Friday’s employment data, Grady said the payrolls figure reinforced his view that another interest-rate increase is coming. He said policymakers would seek a level they consider comfortable and added that Warsh was trying to demonstrate impartiality. Grady cautioned against drawing conclusions about gold from a single month’s economic data, saying longer-term trends matter more.

Grady said the midterm results could give Trump an opportunity to reach a deal with Iran, but could also lead him to take a harder line against Democratic opposition. He said Trump had two years to address the situation and might try to exert as much pressure on Iran as possible.

Grady argued that the proposed Democratic agenda carries a substantial price tag. “If you look at the price tag on a third of what they're talking about, it would crush the U.S. dollar,” he said, describing the prospect as bullish for gold. He called that a long-term story and said it could give gold a floor.