– Research & Information from Core Bullion Traders. As the US election looms large, we give you lowdown on how the result will likely affect the price of Gold.  With less than 2 weeks to go to the election date and on the eve of the last Presidential debate, there are more and more questions as to how the result of this election, will affect the markets and in particular the gold price. After the debacle that was the first US presidential debate – and President Trump’s later diagnosis with COVID-19, we saw how these two events alone fuelled a jump in market volatility.  So what are the likely effects of a result either way and just how will the US Election result affect the gold price?

Trump V Biden – Current Status

Joe Biden, the Democratic candidate, has a solid national lead over Donald Trump but, as we saw with Hillary Clinton V Trump, winning the popular vote is no guarantee of claiming the White House. Biden has been ahead of Donald Trump in most national polls since the start of the year. He has hovered around 50% in recent months and has had a 10-point lead on occasions. Currently, polls in the battleground states look good for Joe Biden but things can change very quickly, especially when Donald Trump is involved. Most polls suggest Biden has big leads in Michigan, Pennsylvania and Wisconsin – three industrial states his Republican rival won by margins of less than 1% to clinch victory last time around. But it’s the battleground states where Trump won big in 2016 that his campaign team will be most worried about. His winning margin in Iowa, Ohio and Texas was between 8-10% back then, but it’s looking much closer in all three at the moment. That’s one of the reasons why a lot of political analysts rate his chances of re-election as low.  

Which States Will Decide This Election?

The actual number of votes a candidate wins is less important than where they win them. Most states nearly always vote the same way, meaning that in reality there are just a handful of states where both candidates stand a chance of winning. These are the places where the election will be won and lost and are known as battleground or ‘swing’ states. These states are Colorado, Florida, Iowa, Michigan, Minnesota, Nevada, New Hampshire, North Carolina, Ohio, Pennsylvania, Virginia, and Wisconsin.

What Does a Trump Win Do To The Gold Price?

The S&P and markets would most likely rally (approx. 4% to 6%) in the near term. The thought behind this view being, that the current administration has had a broadly business-friendly stance over the past four years. Trumps administration has led efforts that resulted in the first tax reform in 38 years – with positive Tax breaks for big business. This election outcome would most likely ‘check’ the price of gold, although any major price drop would not be envisioned, as the ongoing Coronavirus and fiscal stimulants for handling the Pandemic should continue to see the Gold price hold strong.

What Does a Biden Win Do To The Gold Price?

If Mr. Biden wins the Presidency and the Democrats gain control of both the House and the Senate, there’s no doubt this would be negative for stocks. In this scenario we might expect the equity market to respond to such an across the board sweep by the Democrats with anywhere from a 6% to 10% decline in a short period of time. The concern would be over too much legislative power being concentrated in Democrat hands. This result should prove positive for the Gold price with a sharp and steady spike envisioned, followed by a prolonged upward trajectory.

Summary…

Although the US Presidential Election outcome (and race) is an important driver in the price of Gold, we must remember that there are many other factors that influence the price of Gold.  The global Pandemic that we are in the grip of at present, and how it plays out will also continue to have a major influence over the price of gold, with investors always wanting to invest in a safe hedge during these unsteady times.  Rarely a bad investment choice; we are maintaining a Bullish stance on gold for the near future. Contact us today if you would like to know more about gold.  We look forward to dealing with you at Core Bullion Traders. Nigel Doolin is Head of Trading at Core Bullion Traders – A gold trading company based in Dublin, Ireland – he can be contacted directly at: nigel@corebulliontraders.ie or Tel: +353 (0)1 447 5975   Disclaimer: Core Bullion Traders do not guarantee the accuracy of any forecasts or assumptions contained in this post. Nothing contained in this post constitutes an offer to buy or sell securities or commodities and nor does it constitute advice in relation to the buying or selling of investments or commodities. It is published only for informational purposes. Core Bullion Traders does not accept responsibility for any losses or damages arising directly or indirectly from the use of this post or data.