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She's a Bad Mama Jama

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(Kitco News) - Dear Mr. Trump, a word of advice: we preferred this over "nasty woman." It probably would have gone over better.

Sign up Kitco NewsletterBut seriously folks, the third and final debate has come and gone and now we await the victor. So let’s play out the scenario and how it could impact gold. Kitco News was one of the first media outlets to look at the correlation between Trump’s rising popularity and gold’s rally this summer.

Now, the mainstream news is catching up and looking at the possible cause and effect -- according to RBC Capital Markets commodity strategist Chris Louney, "gold reacts when Trump's chances of winning rise above 40% or below 20% in the mainstream media," he told CNBC this week.

In early August, when the precious metal was trading near $1,400 an ounce, Trump's chances of victory were at 50%. And, in late September, when Trump's chances were at 46%, gold hit a high of $1,339. Trump's fall below a 20% chance of winning came alongside a 7% drop for gold.

"We've seen this peak-to-trough matching, but only on those limited bands when his chances really fluctuate," Louney said this week on CNBC.

Most experts we spoke with said a Clinton win wouldn't move gold much in one direction or another, since her policies will most likely be dovish and we wouldn't necessarily see a sell-off in gold. But gold's fortunes could be connected to Trump winning. As one analyst told Kitco News, gold is a bet on fear, "if Trump wins – it would create massive uncertainty –it would be a Brexit like scenario and gold could rip."

However, while most are playing out the scenario of a Clinton versus Trump victory, what about the third outcome? Trump contesting the results should Hillary win? Would that cause gold to hold or perhaps rally on the uncertainty factor?

As for this week, gold prices are up close to 1.2% after three weeks of losses. The metal closed the week above its 200-day moving average, settling Friday at $1,267.70 an ounce. Seems that gold is well supported at $1,250 and any interest rate hike by the U.S. Federal Reserve has already been factored into the price.

Speaking of central banks, the much anticipated ECB meeting came and went without a ripple; the European Central Bank met on Thursday and left interest rates unchanged…sound familiar?

So, gold continues to wait for a fresh catalyst …..

Until then, have a greak weekend!

By Daniela Cambone of Kitco News; dcambone@kitco.com

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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