This electoral tension enhances the appeal gold As a hedging tool, investors view it as a safe haven amid political uncertainty and potential economic volatility that may follow Elections.
Historically, the political landscape directly affects the markets Precious metalsDemands for gold usually increase during times of severe political change or during elections that may lead to different financial and economic policies.
In this context, the results American elections This would have a significant impact on rates Interest And spending policies, which pushes investors towards gold as protection from… Inflation The value of other assets declines.
According to a report by Sasco Bank, gold’s record rise continues before the US elections, which is considered a major risky event, which could lead to a reaction in the market, especially if the results differ from expectations of Trump’s victory.
Gold – which recently touched a historic peak – rose approximately 5 percent in October and 34 percent throughout the year, coming after… Silver Which has increased by 42.3 percent since the beginning of the year. While these rises raise concerns about potential unsustainable gains and a potential peak.
According to the report, it is currently showing gold And silver Strong rises as investors seek safe-haven assets amid fears of financial instability, safe haven demand, geopolitical tensions, and de-dollarization driving strong demand from… Central banksChinese investors have turned to gold amid record low savings rates, and recently increased uncertainty surrounding the US presidential elections.
In addition, interest rate cuts by the Council Federal andCentral banks The other reduces the cost of holding non-interest bearing assets such as gold and silver.
The report points out the “red sweep” scenario in the US elections scheduled for November 5, where one political party, in this case the Republicans, controls the vote. The white house And Congress, a scenario that could lead to a rise in US bond yields amid concerns about excessive… Government spendingpushing the debt-to-GDP ratio higher, while inflation fears are stoked by import tariffs as well as geopolitical risks.
He adds: While nothing goes in a straight line, after the significant rise witnessed by gold, it is still possible that it is heading for a deep correction – perhaps after November 5 if the election result does not result in handing over the keys of the White House and Congress to one party. However, as long as the mentioned reasons for holding gold do not disappear, the possibilities of higher prices remain.
Gold forecast
Capital markets expert and member of the Egyptian Society of Analysts, Raymond Nabil, told the “Eqtisad Sky News Arabia” website:
- Over the past two years, gold has witnessed notable movements; Its price was about $1,850 at the beginning of the year 2023, and it began to be affected by global political events such as the war in And Ukraine and commercial problems.
- Markets It was affected by geopolitical factors, which prompted major investors, investment banks and countries to increase their interest in gold.
- Gold witnessed a price boom and began a strong upward movement, reaching $2,400 in May 2024, after which it entered a sideways trend that continued the rising path, and finally reached the $2,800 range in October.
It is believed that the impact of the US election results will not be direct on the gold movement, which will remain driven by crisis developments GeopoliticalThe extent to which global transport stability and supply chains have returned, and economic tensions have decreased. Also, any interest rate reduction will be in favor of gold and increase its investment attractiveness.
He adds: “It is important to emphasize that political events, such as the American elections, are not the only factor affecting gold prices. The United States, thanks to its long- and medium-term institutions and policies, does not depend on one person in power,” stressing that the pressures on the dollar have given Gold has a relative advantage in the past six months, but the main reason for gold’s rise is the ongoing geopolitical tensions between… Russia And Ukraine, in addition to the tensions in the Middle East since October 2023.
It is believed that gold may reach new peaks in the range of $2,800 to $2,900, and this jump may be temporary, followed by a price correction to the range of $2,760, without affecting the long-term upward trend, which began since the Corona pandemic and has continued with the support of geopolitical events and economic crises.
What does Harris’ victory mean?
In this context, Bill Weatherburn, chief climate and commodities economist at Capital Economics, said in a recent note:
“A Trump presidency will be more inflationary than a Harris presidency, and will likely be more uncertain as well – both of which make gold an attractive asset.”
If Harris wins, this could mean a decline in gold prices in the weeks following the election result. However, against the backdrop of US interest rate cuts, Capital Economics believes that gold prices will rise again in 2025, according to statements reported by “Market Watch”.
Record heights
For his part, the CEO of the Corum Center for Studies, Tariq Al-Rifai, points out to the “Eqtisad Sky News Arabia” website that:
- Gold witnessed record highs this year, as the year 2024 opened at a record price of $2,000 per ounce, and continued to rise throughout the year, currently reaching record levels exceeding $2,700 per ounce.
- These increases are still continuing, and it appears that the general trend of the gold price will remain upward until the end of the year.
- The potential effects of the US elections will be temporary and will not change the general trend of gold.
- However, we may see some volatility as we approach Election Day and beyond.
- In general, gold will continue to move regardless of the political situation around the world.
Demand for gold
In a related context, with the focus on the US presidential elections, Western investors are returning to the gold market, according to a report by Goldman Sachs Research, on its website, which indicated that:
- Gold may provide hedging benefits against potential geopolitical shocks, including a potential rise in trade tensions, Fed dependency risks, and debt concerns.
- Analyst in Goldman Sachs Researcher, Lena Thomas, says: The price of the precious metal is expected to rise to $3,000 per ounce by the end of 2025, after gold rose to several record high levels this year.
She points out that the relationship between changes in gold prices and changes in interest rates still exists, but large central bank purchases of gold bullion have reset the relationship between interest rates and price levels since 2022.
Between Trump and Harris
Financial markets expert, Hanan Ramses, tells “Eqtisad Sky News Arabia” website:
- It is expected that the results of the US elections will differ in their impact on gold markets between a Trump or Harris victory.
- Trump’s “interest” policies, in the midst of his overall economic policies including protectionist policies linked to tariffs, could lead to higher gold prices, as US Treasury yields and interest rates fall, making gold a safe investment option.
- Gold is considered a safe haven, and many countries continue to increase their reserves of it.
- This is in line with individuals’ tendency towards keeping gold as a safe investment, especially with the increasing geopolitical tensions and accelerating events in the Middle East region, which raise fears of it becoming a region of permanent conflicts.
She adds: I believe that gold will continue to rise regardless of the winner, but the balance may be more tilted in favor of Trump (…) In the event that Harris wins, there may not be a clear economic policy, and matters may be left entirely in the hands of the US Federal Reserve. While Trump may seek to interfere in the Fed’s decisions, and he has previously hinted at his desire to reduce his powers to make some decisions.
For investors, Trump’s vision for economic policy may be more attractive, as markets are expected to witness a greater recovery during his reign, according to Ramses, who goes on to say: It is possible that gold will reach new historical levels, especially as investors continue to prefer safe havens within their investment portfolios.
