As the 2024 US presidential election approaches, the high-stakes face-off between current President Joe Biden and former President Donald Trump is drawing significant attention. The election, scheduled for November 5, promises to be a crucial event not only for political enthusiasts but also for market participants, particularly those invested in precious metals like gold.
Election Fallout: Gold Price in the Spotlight
Historically, US elections have influenced the price of gold due to their impact on the geopolitical environment, interest rates, and the performance of the US dollar. Gold, often seen as a ‘safe-haven’ asset, tends to react to uncertainty and potential economic shifts that elections bring.
Past Trends: Gold’s Election Gains
In the lead-up to the 2016 election, where Trump ran against Hillary Clinton, the gold price climbed by approximately $50, peaking just above $1,300 per ounce before the election. However, following Trump’s victory, gold fell to around $1,128 by mid-December, before rebounding above $1,200 in January 2017.
Gold price, November 1, 2016, to January 30, 2017
Similarly, during the 2020 election, gold traded around $1,900 in the week leading up to the vote. After Biden’s win, gold spiked to $1,951 on November 6 but then dipped below $1,800 amid vote recounts and legal challenges. It began climbing again in December, influenced by the confirmation of Biden’s victory and the ensuing political turmoil, such as the January 6 Capitol attack.
Gold price, November 1, 2020, to January 30, 2021
Gold’s Election Impact
While past elections have shown varying impacts on gold prices, market experts suggest that the 2024 election might have a limited effect on gold. Lobo Tiggre, CEO of IndependentSpeculator.com, believes that the outcome will have ideological consequences but will not significantly impact gold, silver, uranium, or the commodities super-cycle.
Gold Surges Under Trump and Biden
During Trump’s presidency, gold rose from $1,209 to $1,839, driven by trade wars, geopolitical tensions, and the COVID-19 pandemic. His protectionist policies and tariffs, particularly against China, influenced global trade dynamics and pushed nations like China and India to increase their gold reserves, contributing to higher gold prices.
Under Biden, gold has continued to see gains, reaching around $2,330 as of June 2024. Biden’s policies, including sanctions against Russia and efforts to mend relationships with allies while maintaining a competitive stance against China, have influenced gold’s performance. Additionally, Biden’s economic policies, like the Inflation Reduction Act and Chips Act, have aimed to reduce reliance on China, further impacting gold prices.
Fed Decisions Crucial for Gold’s Future
Beyond the election, the Federal Reserve’s decisions on interest rates play a crucial role in gold’s performance. The Federal Open Market Committee (FOMC) is set to meet from November 6 to 7, right after the election. Market participants expect the Fed to make its first rate cut in September, which could boost gold prices further if rates are lowered post-election.
Gold’s Historical Returns
Investors should consider not only the presidential race but also the broader political landscape, including which party controls Congress. Historically, gold has averaged higher returns under Democrat-controlled Congresses compared to Republican-controlled ones. However, regardless of the election outcome, the current geopolitical and economic climate suggests that gold will remain a valuable asset for those looking to fortify their wealth against uncertainty and inflation.
Goldman Sachs recently advised investors to buy gold to hedge against inflation if Trump and the Republicans win the 2024 election, predicting that certain policies could worsen inflation. Bloomberg Intelligence Strategist Mike McGlone has even suggested that gold could reach $7,000 by 2025.
As the 2024 election nears, consider fortifying your portfolio with a Gold IRA or by buying physical gold to strengthen and diversify your wealth against economic uncertainties.
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