How Will the US Election Impact Gold Prices?
The 2020 US presidential election is going to be one of the most consequential elections in decades. Issues ranging from healthcare, immigration, crime, and housing will be addressed in the election.
However, the most critical issue the election is facing is the economy. As the coronavirus has significantly damaged the economy, the election will determine how everything goes in the future. This, in turn, will determine the prices of precious metals like gold.
Precious Metals and the Election
Generally, precious metals tend to thrive in situations with high geopolitical and economic uncertainty. The present circumstances provide ample opportunities for such situations.
Firstly, the coronavirus has crashed the economy and unemployment numbers. The uncertainty has already contributed to record breaking rises in precious metal investments. A contentious election is only likely to add to such uncertainty.
Additionally, the election itself might not be safe to be conducted in person and will probably rely on mail-in ballots, which would delay the election results. This would further exacerbate social and economic tensions, which would be a boon for gold prices.
Historical Precedents
Historically speaking, the price of gold and other precious metals shows clear patterns and price trends. Generally, during an election year, gold prices are highest in September and October. They stabilize after the election, and by inauguration day, have leveled off the previous levels.
However, there are caveats to these historical precedents. After the 2004 election, gold still had bull markets and stayed as such, even though the economy was still in good shape.
The current election, with an unconventional Republican candidate, the global pandemic, and severe economic problems- might not follow previous elections’ historical trends.
Presidential Policies
Both presidential candidates have proposed to implement significant stimulus packages once they are elected. In the case of President Trump, that stimulus will come in the form of infrastructure spending.
On the other hand, vice president Biden has also promised increased government spending in areas like healthcare and education.
Around 50% of Americans believe that Donald Trump is the most capable person of securing a thriving economy, which indicates that should he be reelected, the prices of precious metals could begin to level.
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