U.S. election: Analyzing what’s next in precious metals
Gold doesn’t correlate strongly to U.S. presidential elections, but has performed slightly better after Democratic wins.
With the U.S. Presidential election scheduled for Nov. 5, it’s hard not to wonder what the correlation is between precious metals and Republican or Democratic presidents.
The answer is: There isn’t much of one, however, gold has historically performed better under Democrats than Republicans.
Matt Weller, head of market research at Forex.com, said gold has performed well under presidents of both parties since the 1970s, however, Democratic presidents have averaged a 1.5% gain in gold, compared to a 5.5% loss with Republicans in trading between election day and the inauguration in January.
Weller suggested the movements could be attributed to the widespread belief that Republican presidents will emphasize fiscal conservatism and decrease government spending, which has historically been bad for precious metals prices.
Weller concluded that his report should be taken with a grain of salt due to the complexity of geopolitical climates throughout various presidencies over the past 50 years.
While a Democratic win could provide a short-term opportunity for precious metals traders, fiscal policy changes and global current events are much more likely to be a more significant driver of prices moving forward.
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