Although the precious metal had just recorded the worst weekly drop since 2013, Paul suggested that “short-term, gold has taken a big hit and it could very well go down more but it’s still up 10 percent from a year ago” and that “The laws of economics are more powerful than all the politicians and all the bankers – believe me, [regardless of the election results] gold prices are going up.”
Towards mid October, Chris Louney, Commodity Strategist for RBC Capital Markets noted an interesting and ‘strange correlation’ between Donald Trump and gold. “Gold reacts when Trump’s chances of winning rise above 40 percent or below 20 percent in the mainstream media,” Louney explained. This was because both of Trump’s highest polling positions in the previous five months coincided with high points for gold. In early August, when the precious metal was trading near $1,400, Trump’s chances of victory were at 50 percent, according to FiveThirtyEight. And, in late September, when Trump’s chances were at 46 percent, gold hit a high of $1,339.
At the start of November, HSBC suggested that investors should choose gold as we begin to approach the day of the election as it would be a certain winner – no matter who wins at the polls. According to James Steele, the bank’s Chief Precious Metals Analyst, both candidates have backed trade policies that could stimulate demand, with gold offering a potential “protection against protectionism,” Steele said. As Hillary Clinton, the Democratic candidate has also argued for the renegotiation of longstanding free-trade agreements, both outcomes could prove positive for gold.
It was suggested that if Donald Trump triumphs at the polls, gold could rise to $1,500 an ounce and if Clinton wins – the price of the metal could improve to $1,400 an ounce by year end.
James Butterfill, head of research and investment strategy at ETF Securities, echoed the comments by HSBC and also suggested:
“Gold is seen as a hedge against political uncertainty, and President Trump would bring more political unpredictability than any president for generations, particularly over the U.S. Federal Reserve’s leadership and monetary policy strategy.”