Democrats' Victory Bullish or Bearish for Gold?

Comments: Gold sold off over $10 on news of the Democrats' success in regaining a majority in the House and closing in on a majority in the Senate, breaking the recent short term uptrend. Is the Democrats' victory bullish or bearish for Gold?

The following factors argue that it is bearish for Gold:

1. The Democrats are likely to be less aggressive and less confrontational in the international arena. A lessening of geopolitical tensions, many of which have been either caused or exacerbated by the U.S. will lead to Gold being less attractive as a currency of safety. For instance, it was reported yesterday that Gold declined a further $5 on the news that U.S. Defense Secretary Donald Rumsfeld was shown the exit sign.
2. It would be difficult to spend more money and cause greater deficits than the Republicans have done over the last few years. The Democrats might be able to put a check on Republican spenders gone wild.

But, the following factors argue that the Democrats' victory is bullish for Gold:

1. Democrats are perceived as being tougher on trade with China. They will likely increase the pressure on China to relax FX controls which will have the effect of increasing the prices of many imported goods in the U.S. leading to possible greater inflationary pressures.
2. Democrats are considered as protectionist, which could hurt the U.S. economy, putting pressure on the US Dollar.
3. Democrats are historically friendly towards social spending agendas which could continue to leave the liquidity spigot open and pouring.

Overall, it's unclear how much will change with the White House firmly in the hands of conservatives. I suspect that this would have been a Gold bearish event if it had happened 4 years ago. Today, with the situation being what it is on the international front and on the domestic fiscal front, at least for the neat future, it probably comes as too little too late.

Related Article: "Wall Street Undeterred, Gold Confused"
[http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=C99C2FE4-17A4-1130-F542CD7932527CD9]

Do you think that the Democrats' winning a majority in the House and Senate is bullish or bearish for Gold? Let me know what you think.