Is The US Election Result Likely To Stem Gold’s Rise?

By Doug Young – 18 October 2024

Introduction

Geopolitical Tensions and Fiscal Concerns Drive Gold’s Rise Amid Election Uncertainties

The upcoming US presidential election is expected to have far-reaching consequences, not only for the nation but also for the global economy.

Amidst the political uncertainty and market volatility, one asset has been steadily gaining momentum – gold. With geopolitical tensions and fiscal concerns on the rise, experts are predicting a bullish future for the precious metal.

Factors Driving Gold’s Rise

Geopolitical Tensions

Geopolitical tensions around the world have long been a catalyst for increased demand for gold. As countries grapple with trade disputes, conflicts, and uncertainties, investors seek stability and turn to gold as a safe-haven asset.

This trend is likely to continue regardless of the election outcome. In fact, gold’s geopolitical premium could rise even further if President Trump secures another term and follows through on his tariff threats.

As more countries explore transactions outside the US dollar system, the appeal of gold as a hedge against geopolitical risks remains strong.

Fiscal Concerns

The United States faces mounting fiscal challenges, with concerns over the growing national debt. Experts have raised alarm bells, cautioning that the country’s fiscal situation is unsustainable.

Regardless of who takes the White House, it seems unlikely that either administration will prioritize fiscal austerity.

President Trump has expressed a desire to cut taxes without a clear plan for reducing spending, while Vice President Biden and Senator Harris have proposed fiscal programs which would potentially expand the deficit.

This lack of fiscal discipline raises inflation risks, which, in turn, bolsters gold’s appeal as a hedge against economic uncertainty.

Political and Economic Factors Impacting on Gold

Federal Reserve’s Monetary Policy Decisions

The decisions made by the Federal Reserve regarding monetary policy play a crucial role in shaping gold’s trajectory.

A lower interest rate environment is generally favorable for gold, as it increases the metal’s appeal as an alternative investment.

In September, the Federal Reserve cut interest rates for the first time in over four years, signaling a return to a declining rate regime. Going forward, market observers expect further interest rate reductions, with the central bank anticipating a total reduction of 200 basis points over the next two years.

This monetary policy stance, irrespective of the election outcome, is likely to support gold’s upward momentum.

Economic Uncertainty and Market Volatility

Economic uncertainty and market volatility have become defining features of the global landscape.

Amidst trade tensions, geopolitical conflicts, and the after-effects of the health crisis, investors are seeking refuge in safe-haven assets. Gold, with its intrinsic value and historical role as a store of wealth, has emerged as a preferred choice for many.

Central bank dollarization efforts and a general sense of unease regarding the stability of global markets contribute to the sustained demand for gold. As long as economic uncertainties persist, gold is expected to maintain its allure as a reliable investment option.

Outlook for Gold Post-Election

Gold as a Hard Asset

Looking ahead, gold remains an attractive option for long-term investors aiming to preserve purchasing power.

The combination of geopolitical risks, fiscal concerns, and potential shifts in monetary policy following the US presidential election makes a strong case for gold as a hard asset.

Regardless of who takes the White House, the factors driving gold’s rise are unlikely to disappear overnight. Investors seeking security in the face of volatility can find solace in the enduring appeal of gold.

Conclusion

As the US presidential election approaches, the impact on financial markets and various asset classes is inevitable.

Amidst the uncertainty, gold has emerged as a beacon of stability, driven by geopolitical tensions, fiscal concerns, and a desire for safe-haven assets. The factors propelling gold’s rise, including economic uncertainty and market volatility, are expected to persist beyond the election.

For investors looking to navigate the post-election landscape and preserve purchasing power, gold stands as a reliable and attractive option.

BREAKING...

Continue reading

Read in full