How Will the US Election Impact the Price of Gold

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With the American election now less than two weeks away, investors are wondering how the final results could impact a volatile precious metals market. While studies show that the price of gold in the long-term is primarily affected by US economic and monetary policies, rather than simply the result of a presidential campaign, the run-up to an election does show distinct trends. Typically, there is an increase in the price of gold as the election year approaches. As the future economic policies of the candidates become more established, there is a slow decline in the few months immediately preceding the election before another noticeable bump after the election is over.

History shows us that the strongest market reaction occurred when Jimmy Carter was brought into office in 1977. Like current Republican nominee Donald Trump, Carter was seen as an outsider from the political establishment of the time and viewed with feelings of anxiety from many of the Washington elite. This period of history gives credence to the argument that Trump, too, could bring with him a similar level of uncertainty. According to FX Pro, the current price of gold is around $1,270 per ounce, but how could this change as we approach the latter stages of the election?

What We Learnt from the Final Debate

For precious metal investors, perhaps the most interesting facet to take away from the final debate was that the market could actually go on to benefit whoever ends up in the Oval Office. Previously, a victory for Donald Trump was thought of as the only way the gold market would prosper. Rightly or wrongly, a Trump presidency is perceived by the wider public to present a higher level of uncertainty compared to his rival. While this would be detrimental to the value of the dollar, the price of gold typically rises during these periods as a result of bulk buying from people looking to invest in a more secure source of wealth.

However, during the final debate event moderator Chris Wallace questioned Trump on whether he would accept the results of the election whatever the eventual outcome. His failure to concede has sparked much outrage amongst political analysts, raising the prospect of some kind of civil unrest should Democratic party candidate Hillary Clinton go on to take the election. This means that, no matter what the outcome of the polls on November 8, there will be a genuine feeling of uncertainty that the market thrives on. Even if Clinton is named as the 45th President of the United States, the stability that was taken for granted can no longer be guaranteed.

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