The prices of gold fell on Wednesday as the U.S. dollar strengthened on the uncertain outcome of the Georgia runoff elections, which would determine control of the Senate and the success of President-elect Joe Biden’s legislative agenda. The dollar recovered from multi-year lows that made the yellow metal more expensive and less attractive to investors using other currencies.

Spot gold soared close to a two-month high earlier in the session. It is now trading at $1,948.45 per ounce as of 0718 GMT.

Voters are already being counted in the dual runoff elections in Georgia. An exit poll compiled by Edison Research showed that Democratic senatorial candidates Raphael Warnock and Jon Ossof jumped to early leads, but they have now been overtaken by their Republican opponents Kelly Loeffler and David Perdue. The counting could be finished by Wednesday, but it could take several days to know the final result because of the razor-thin margins.

Some experts are concerned that a double win by Democrats in Georgia could make it easier for Biden to repeal the corporate tax cuts put in place by the previous administration and pass other legislation that could influence trading. The Republicans need only one seat to retain their majority.

Stephen Innes, the chief global market strategist at Axi, noted that the gold market is highly reactive to the election results. He predicted a slight decline in bullion prices in a Republican majority, but it will be short-term given the forward-looking inflation narrative. Innes expects the yellow metal to reach $2,000 by the end of January. OCBC Bank’s economist Howie Lee added that the underlying motivations in gold investments remain the same. These include lower interest rates, soft dollar and high inflation rates.

Meanwhile, U.S. factory activity increased from 57.5 in November to 60.7 in December. It beats analysts’ forecasts of a slight decline to 56.5 and is the highest reading since August 2018.

In a related development, the holdings in the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, dropped by 0.1% yesterday to 1,186.78 tons. Also, the market will be monitoring the release of the minutes of the Federal Reserve’s December policy meeting later today