With US elections on the other side of the week most of the investors and capitalists are on the cliff for the early predictions of the us elections. Most curious are the investors who involves gold into their monetization practices. US Election plays an important role in the rise or the downfall of the Gold Price. These presidential elections are going a play a very major role in shaping up the world’s future economy. There is no doubt that we are going to likely see increased volatility in stock markets in the run until the election day and investors seeking traditional safe havens such as gold, particularly if the race between the two candidates gets very close and there is also a growing risk of a contested outcome.
While we have no clear evidence of the linear relationship between the gold price and the election outcome, the only one thing we are certain about is that the November elections are going to add a whole lot of uncertainty to these already troublesome times caused by the global pandemic. The investors are growing increasingly concerned about the standoff between President Donald Trump and Democratic nominee Joe Biden, which could lead to an uncertain election outcome, having no clear winner on the day. Moreover, the increase in mail-in ballots due to the coronavirus outbreak could lead to more confusion and delayed results, while Trump’s comments that he might not accept a peaceful transfer of power in case he loses in November elections have definitely raised concerns.
And also, the recent news of President Trump’s COVID-19 diagnosis has added fresh uncertainty to the final times of a presidential race and anything could bring the race between the two candidates even closer due to the likely increase in public sympathy for the sick President. At these unexpected times of the health crisis and economic uncertainty, these elections are expected to add further to stock market volatility and weigh on investors’ risk sentiment.
Let’s Check out the Four Possibilities which could happen in US Elections and make it easy for the Investor’s to predict and take Early Crucial Decision to avoid Losses Especially in the Gold Market.
Let’s Dive into the ocean and check out the Inside structure for Better Clarity.
Investors would be on the Pent house of the 100th floor Enjoying the view if Biden’s Senate take charge of the White House. It is Assumed that If Biden Take control of the White palace there would be a fall in Dollar value.
To support this scenario, I will bring you the Statement of Kael Weston, Candidate of US Representative’s Interview with Kitco
“What is the scenario which drives up inflation expectations, brings the Fed in to keep long-term borrowing costs low and makes real rates go down to 2%. If you can work out which is the quickest scenario to get there, that will be the most bullish one for gold. And that, to me, looks like a blue wave," Weston said.
"The conventional wisdom is that if we see this blue wave scenario, then the dollar will get smoked because the chances of passing massive stimulus become much greater," he said.
However, markets could also see the U.S. dollar rise in case of a blue wave scenario because, with the new stimulus, the U.S. is likely to remain an attractive investment destination in relative terms, Weston added.
Wouldn't be surprised to see the dollar strengthen in light of the relative attractiveness of investment destinations around the world. Europe has this big COVID issue that is becoming more prevalent. We are seeing signs of concern like a deflation problem," he said. "But if you look at the U.S. — $3.5-trillion stimulus plus a more aggressive Fed … We start talking about that U.S. exceptionalism story, which creates a flood of inflows into the U.S. And suddenly the dollar strengthens. One of the reasons why the U.S. dollar does so well is because the rest of the world looks less good."
"You could see a situation where the U.S. dollar strengthens and gold rallies alongside it because of the closer move to MMT and deficit spending. Gold does very nicely in that environment," Weston noted.
To Conclude this, I would say Placing Good bets on Gold with hope of Biden’s Win would make Good Profit but when adding Covid Pandemic into Consideration there might be some fluctuation’s in the predictions of Gold Prices as the Dollar price would incline when Dollar price would incline after receiving huge investment from various sources.
If this Scenario is Happening, a turtle start could be expected by the economy which in return will Affect the Gold Market. Primary Motto of this Senate would be Recovering damaged economy and Setting a right track for the Investors and capitalists.
In case of a Trump win, we can price it in a smaller gold price rally, because a lot will depend on the Senate outcome as well as the economic recovery
The status quo is good for gold. It really depends on what the economy is doing at that time and what it needs. If Trump is at the White House and we've got the GOP running the Senate and Democrats are running the House, it really depends on what the economy looks like. There will be a need for more stimulus. But is that going to be half a trillion, a trillion, or something much punchier?"
But the markets will only be concerned on the basis of a contested election because, it would actually hit economics on a national basis.
If that would be the case, then markets should expect to see a move down in Treasury yields, and the gold would definitely benefit from that.
It would depend on what contested election actually means and how long it will go on for. The reaction in markets would come from how it all impacts the economy. Gold would work as a hedge against that.
Upcoming week, trading the actual election day will be difficult since the results might not be known as quickly as before
It is all about how long until we see the overall results, including the Senate races. Markets would want to know instantly. The quicker we have an outcome, the quicker the business community can go about their daily lives understanding the investment landscape they will have to work in — the fiscal situation, regulations, and taxation. Because fiscal would be a dominant story right now, the ability to pass a big fiscal stimulus or ability to pass anything given what we've seen recently is the actual dominant story.
The more this uncertainty drags on, the more fearful the markets are likely to get.
The Most Blasting News for the Gold Investors and Capitalist’s Would be a split congress Let’s Support the Statement with the help of a Interview which was given to Kitco News.
"If you look at the gold market now, it is pretty much unconvinced by this blue wave idea. They are looking more at a split Congress scenario. If you look at the volatility options market, call volatility is only trading at a modest premium to put volatility. So, the idea that if we are going to see a move that will be slightly more explosive to the upside than downside over the one-month period, that has come down very sharply. If we were really bullish on gold, it would be higher. It's very neutral now," Weston explained. "The sentiment in calls versus puts, it is very neutral. The options market is not telling me that they are expecting this dynamite move to the upside."
This kind of positioning is more reflective of a split Congress scenario, which is all about waiting for signs of fiscal stimulus in 2021 and signs that the Fed will actually do what it is supposed to.
"We've got a lot of clarity around what the Fed's mandate is. We just don't know what they are going to do. Once we firmly understand, the gold market will respond," Weston said.
Split Congress scenario means that the fiscal impulse becomes less prevalent, which puts more emphasis on the Fed trying to generate inflation through their mechanisms. "A split Congress brings the Fed more in. And I think the gold market is going to be looking at what the Fed can do to lower rates, which is why you have this kind of a holding pattern," Weston noted.
A contested election is a more likely outcome if the election is a close one. Civil unrests are also quite likely in this outcome. However, the impact on the markets will only be felt if these delays and possible unrests impact the economy at the national level, Weston pointed out.
"If Trump sees some irregularities, it does feel like there is an elevated risk that he'll take it to the Supreme Court. If Trump doesn't accept the results, the prospect of civil unrest is obviously high. It doesn't take much at the moment to cause unrest," he said. "But markets would only get concerned if a contested election means that it would actually hit economics on a national basis."
If that is indeed the case, then markets should expect to see a move down in Treasury yields, and gold is likely to benefit from that.
"Depends on what contested election actually means and how long it will go on for. The reaction in markets comes from how it all impacts the economy. Gold will work as a hedge against that," Weston added.
Come next week, trading the actual election day will be difficult since the results might not be known as quickly as before.
"It is about how long until we see the overall results, including the Senate races. Markets want to know instantly. The quicker we can get an outcome, the quicker the business community can go about their daily lives understanding the investment landscape they have to work in — the fiscal situation, regulations, and taxation," Weston stated. "Because fiscal is such a dominant story right now, the ability to pass a big fiscal stimulus or ability to pass anything given what we've seen recently is the dominant story."
The more uncertainty drags on, the more fearful the markets are likely to get.
"Gold's price action will depend on volatility in this scenario. If there is a big drop in markets, we know that gold doesn't necessarily work as a safe haven because some people sell gold to pay for other assets. The positioning in gold is much more neutral than it has been for some time. Some people have been using gold as a hedge against the negative outcome," Weston said.
Overall, Weston does not see a case where the gold price gets crashed since the long- term investment case stacks up for the precious metal.
Let’s Check out the other sources which have Given their Authentic opinions about US Elections.
So, in the end does it really matter who will end up in the White House? If we take the past as an indication, a second Trump administration would likely be at least as polarizing and turbulent as the first term, adding further uncertainty and volatility, although the potential for radical policies could be lower in the second term should Congress remain divided.
On the other hand, the winning of Joe Biden would represent a return to a more conventional administration, with an ambition to restore the United States’ previous stance on the foreign policy front, presumably resulting in less volatility associated with political risks and international tensions.
While the two candidates represent different views on the future of the world’s largest economy, from domestic policies to the United States’ role in the global arena, the near-to-medium term focus, despite the election outcome, will be on battling the Corona crisis and stimulating the economic recovery.
Under both scenarios, the US economy will face a long and bumpy recovery and, if anything, the post-COVID recovery may be weaker under Joe Biden’s administration due to the promised tax increases and a focus on a more sustainable growth.
So, in conclusion, whoever ends up in the White House, it is important to emphasize that the underlying economic conditions, ongoing tensions between the US and China, rising inflationary expectations and the fore looming second wave of COVID-19, remain highly favorable for gold in a long term.
But for the present term, we are going to see increased volatility, poor trading and fluctuations in the stock markets and the gold price.
Being said that, we may see gold consolidating or getting caught up in a broader sell-off in the short term, gold will be the one to benefit from growing risks revolving around U.S. presidential elections and we may as well see the metal hit a fresh record before the year-end.