Gold will be the victor in this year's U.S. election - Heraeus
(Kitco News) - The gold market has priced in a lot of geopolitical turmoil ahead of the Nov. 3 U.S. election, but one precious metals firm said that it expects gold prices to remain well supported as this will be an election like no other.
Gold has managed to hold critical support above $1,900 an ounce nearly a week after Democratic nominee Joe Biden and Republican nominee President Donald Trump clashed in a chaotic debate. Analysts at Germany-based Heraeus Precious Metals said that uncertainty ahead of the election would continue to support gold prices in the near-term.
“A great deal of political and economic uncertainty is already priced in for gold, but it could intensify as election day approaches, increasing the allure of gold as a safe haven,” the analysts said in a report published Monday.
Quoting election models from the Economist, the analysts said there is an 88% chance that Biden will win the election; however, because of the Electoral College, they added that Trump could still pull out a victory.
“In 2016, the polls underestimated the level of support for Trump and showed Hillary Clinton with a wide lead right up until election night,” the analysts said.
However, regardless of who wins, the German firm said that gold would continue to benefit. They noted that a Biden victory could push assets away from volatile equity markets and into more safe-haven assets like gold.
At the same time, Biden is also proposing a spending plan for an additional $7.3 trillion over the next decade.
“U.S. government debt is already larger than U.S. GDP and this will add to the ever-growing pile. This could see further upside for gold if it leads to a weaker U.S. dollar,” the analysts said.
Meanwhile, if Trump is reelected, the Republican president will still face an economy that is on a precarious edge.
“Regardless of the outcome in November, a weak macroeconomic environment in the U.S. will prevail in the near term, which supports gold,” the analysts said.