Have the US Elections Affected Gold Prices This Year?
The U.S. presidential elections play a significant role in deciding the future of the world’s largest economy for the next four years at least.
The fluctuations in the dollar rate influence the global financial market as well as the metals market.
But the question of the hour is, does it make a difference to the gold rates what party makes it to the White House?
In the past 28 years that withhold seven U.S. presidential elections, it was determined that gold rates decreased by only 0.5% ten days after the polls on average.
Gold gained the most in 2004 and lost the most in 2016, proving no linear relationship between the election outcome and gold prices, but the uncertainty has stepped in only due to the pandemic.
For the whole of 2020, the precious metals have been advancing. Gold has experienced its most extensive stretch since 2002; its prices settled at $1,890 per ounce in November 2020 after peaking at a record high of $2070 per ounce.
Gold traders were quick to estimate that gold prices will increase despite who the winning candidate would be. Some still predict that it would sell at $4,000 per ounce in the next three years.
What could affect gold prices?
Central banks are printing trillions of dollars at zero interest rates to counter the coronavirus pandemic’s effects on the U.S. economy. A looser monetary policy makes investors seek gold as an alternative asset.
It’s a directly proportional relationship; the real yield going further down means the gold prices will continue soaring.
On the other hand, the development of an unfailing vaccine can shift a few positives working in favor of gold.
So, until Joe Biden successfully regains control of the U.S. economy, any fluctuations in gold prices will be short-lived.
Despite the uncertain future, gold remains as volatile as ever. A little gold in your portfolio goes a long way.
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