The real 'winner' of the Presidential debate; why stocks rallied and gold price fell afterward
Following Tuesday night’s debate between President Donald Trump and former Vice-President Joe Biden, stocks climbed higher, with the S&P 500 up 1% on Wednesday’s session. Gold saw pressure, dipping 0.3%, while silver fell by 3%.
While the two candidates argued on several contentious issues ranging from the pandemic to the economy, one thing was clear: more stimulus would be added to the economy from either side, said Will Rhind, CEO of GraniteShares.
“I think one thing that we can be almost certain about is that the big winner from last night’s debate is stimulus,” Rhind said.
Rhind added that a lack of stimulus is not necessarily bearish for gold as much as it would be for the stock markets.
Equities investors generally showed apathy in response to the debate, Rhind said.
“I think it could be either apathy, in terms of the market doesn’t really care. It was a messy, messy debate. Perhaps the only thing that came out of it as far as the gold market is concerned is the messiness of it in terms of the combative nature of the candidates perhaps showed us that the parties are farther apart on stimulus than we thought,” he said.
The different methods of re-opening the economy would have varying impacts on markets as well, Rhind added.
“On the Trump side, if you are more aggressive, dare I say, with [re-opening the economy], then you would see more economic activity, I think that could be positive for gold in terms of having this stimulus result in some kind of inflation in the economy and that is a big concern for investors and one of the reasons people are buying gold at the moment,” he said.
A more restrictive policy with continued lockdowns may result in deflation, he said.
Rhind noted that the central bank, Federal Reserve, is likely to remain accommodative, which would be positive for gold.