The 2024 U.S. presidential election, featuring Donald Trump and Kamala Harris as major candidates, is expected to influence various markets, possibly including gold. Historically, political uncertainty and election outcomes have affected the precious metals market due to the impact on economic policies, interest rates, and geopolitical stability. Gold is often viewed as a safe-haven asset during times of uncertainty, and the election results could sway its price depending on policies that affect inflation, government spending, and the U.S. dollar.
What happens if Trump wins the U.S. election? The answer is not as simple as saying the price of gold will soar higher from increased uncertainty. As case in point, the price of gold initially declined for two months once the outcome of Trump’s 2016 election win was certain. The price then reversed course, rising by 14 percent in 2017 before declining slightly by 2 percent in 2019. The price of gold then soared in 2019 and 2020 by 19 and 25 percent.
Trump
One might think that if Trump wins reelection, his prior policies, which included protectionism and deregulation, might lead to market volatility and rising gold prices again but that is far from certain. In his previous term, Trump’s focus on America-first trade policies created international tensions, which often boosted demand for safe-haven assets like gold. On the domestic front, increased spending and potential challenges with the Federal Reserve’s monetary policy might contribute to inflationary pressures, further driving up gold prices. Analysts also speculate that a pro-business stance might not stabilize the dollar, which in turn could lead to higher gold prices as investors seek protection against a weaker currency.
Harris
On the other hand, if Kamala Harris continues the Democratic policies of the Biden administration, the global economy could suffer. These policies may focus on higher taxes to pay for social programs, which could increase fiscal deficits. Such measures could lead to inflationary concerns that might make gold attractive to investors looking to hedge against rising prices. Additionally, a more progressive approach to regulation, particularly in financial and environmental sectors, may create market uncertainty, further driving up gold demand.
The Broader Picture
Aside from election results, other key factors influencing gold prices include Federal Reserve policies. Regardless of the election outcome, the Fed's approach to interest rates and inflation will play a pivotal role. If inflation remains high, gold, as a traditional inflation hedge, may continue to rise. Conversely, if interest rates are hiked aggressively to control inflation, something markets are currently not considering, gold might face downward pressure since higher interest rates can strengthen the U.S. dollar, reducing the appeal of gold.
Another factor to consider is geopolitical uncertainty, which tends to drive safe-haven demand for gold. Given the current global economic climate, trade tensions, and regional conflicts, these elements could continue to push investors toward gold regardless of the U.S. election outcome.
Summing Up
Overall, while the 2024 election will undoubtedly affect market sentiment, the overall impact on gold prices will likely be shaped by a combination of economic policy, inflation expectations, and broader geopolitical factors. Investors in gold should watch not just the election outcome, but the policies enacted by the next president and how they align with the global economic situation. Whether Trump or Harris emerges victorious, the direction of U.S. fiscal and monetary policy will remain central to gold’s performance in the near future.
