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The US Presidential Election and Gold Prices
Gold and Politics
Gold is primarily a safe haven asset. Basically, uncertainty in the markets cause gold prices to rise versus riskier investments in things like stocks. This uncertainty can come from many sources, but right now, politics has been at the forefront. Gold was trading at around $1100 before the election cycle began, now it is over $1300.
The presidential election between Republican nominee Donald Trump and Democrat Hilary Clinton has been as stormy for the markets, as it has been for political pundits. Gold can fluctuate based on preconceived notions on how each candidate would affect the markets. If the market feels safe, gold prices will decline, and if they become shaky, they will increase in price.
Donald Trump is the wild card between the two since he neither has a political record, or any substantive policies on the table. His national security rhetoric has also been an area of concern, as he has made various comments about ISIS and nuclear weapons. The gold market has risen when he was polling well earlier this month with gold hitting a high around $1350 an ounce.
Hilary Clinton is seen as the “safer” of the two with a clear political background and proposed initiatives. Now that the first debate is over and it seems that she may have gained a narrow lead, gold has dipped to $1321. The market obviously sees Clinton as a politician that will keep things from rocking the markets.
Gold prices should see a steady decline, if Hilary is able to keep the pressure on Trump and win the election. However, should Trump make any headway in the polls, gold could get very volatile and break above $1350 an ounce.
Trump has imploded in the last week and gold prices have tanked as a result. Gold went below $1300 and seems to have bottomed out around $1250 for now. If banks and other institutions feel confident in a Hilary victory, then look for gold to move toward $1200 as they begin to move money from the safe haven into to the marketplace.