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Informist, Thursday, Jul 25, 2024

 

MUMBAI – The ongoing uncertainties related to the US presidential elections and the increasing geopolitical threats will add more volatility and impact broader macro variables that could draw investors towards safe-haven assets like gold, the World Gold Council said in a report.
 

Though Republican candidate and former President Donald Trump is currently ahead in the polls, the outcome is far from secure. The recent assassination attempt on Trump and President Biden stepping down from the presidential race has increased the level of uncertainty for an already divided US electorate, it said. 

 

"Elections have not, historically, had a significant or immediate effect on gold's performance but, regardless of the winning candidate, near-term geopolitical risks remain high and may serve as a catalyst for gold," the WGC said in its latest report 'Ballots to Bullion - Examining the US Election's Effect on Gold'.

 

The yellow metal fulfils the role of hedge in investor portfolios as the global and the US electorate remain highly polarised with the gold price typically responding to key drivers, such as the direction of the US dollar, interest rates, or the perceptions of risk, the report said.

 

WGC said historically the sale of gold coins through the US Mint tends to spike in anticipation of a Democratic victory. For instance, the average monthly volume of gold coins sold via the US Mint rose to 86,400 ounces in the month a Democrat win compared with the historical average of about 60,800 ounces per month over the past 37 years. In comparison, the average monthly volume of gold coin sales during the month of a Republican win was 71,000 ounces.

 

The study found that, historically, gold sales rose on Democratic wins and the average gold sales from the US Mint surged on Republican victories over the past 37 years. 

 

WGC analysis of gold and US presidential elections suggests that gold is not reacting directly to party affiliation or leadership changes. Rather, it highlights the relevance of key global macroeconomic drivers of gold’s performance in contrast to specific local dynamics.

 

The WGC said that gold prices did well during the Trump and Biden presidencies due to policy decisions and broader global macroeconomic drivers. The yellow metal price rose 60% during Trump's presidency and has gained over 30% so far under President Biden. End

 

Reported by Sandeep Sinha

Edited by Saji George Titus

 

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