Trump or Biden? How gold prices could move
Investors are bracing for the outcome of a divisive election following weeks of speculation that a contested result could roil markets
As the US elections headed towards a tight finish, gold prices remained choppy today. On MCX, gold futures were down 0.5% at ₹51,328 per 10 gram. In global markets, gold was down 0.6% at $1,897.01 an ounce as early tallies suggested the outcome of the American presidential race between Donald Trump and Joe Biden could be closer than polls had suggested.
Investors are bracing for the outcome of a divisive election following weeks of speculation that a contested result could roil markets.
"There is also a strong chance that Democrats have a majority in Senate, which implies higher fiscal spending. In terms of connotation for the markets, we should brace for a transient sell-off in US equities and fall in US dollar, Ergo, Gold could rally higher, helped by a tumbling US dollar and concerns of higher fiscal spending and potentially rising inflation. Needless to mention, Fed will remain tolerant of the same, with the central bank recently articulating that it will stand pat on interest rates for the next three years. In case of Biden as the next US President, Base metal prices should move higher as US/Chinese relationship will stabilize and markets start pricing in a probable trade deal," said Hitesh Jain, Lead Analyst – Institutional Equities.
"On the contrary, If Trump reclaims Presidency and Republicans maintain majority in the US Senate, we could have an ensuing stock market rally and stronger US dollar, as investors will be pleased with the fact that US corporate taxes will remain low. On the commodity front, Trump victory will translate into weaker tone in precious and base metals, with non-ferrous complex being the most vulnerable, hauled lower by prospect of heightened trade tensions with China," he added.
In case of a mixed equation, Hitesh Jain of Yes Securities says, "where Mr. Biden turns out to be the next US President, while Senate is controlled by Republicans. markets will construe this sort of power sharing as an impasse on various reforms and nothing dramatic will be seen in the next four years."
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