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U.S. election: Analyzing what’s next in precious metals

 
 U.S. election: Analyzing what’s next in precious metals (photo credit: SHUTTERSTOCK)
U.S. election: Analyzing what’s next in precious metals
(photo credit: SHUTTERSTOCK)

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.

This chart shows the performance of gold during Republican (red) and Democratic (blue) presidencies. (Source: StoneX) (credit: PR)
This chart shows the performance of gold during Republican (red) and Democratic (blue) presidencies. (Source: StoneX) (credit: PR)

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.

Data showing how gold performed in the short-term following presidency changes in the U.S. (Source: U.S. Money Reserve) (credit: PR)
Data showing how gold performed in the short-term following presidency changes in the U.S. (Source: U.S. Money Reserve) (credit: PR)

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. 

This article is for informational purposes only. The opinions and analysis herein are those of the author and are not financial advice. The Jerusalem Post (JPost.com) does not endorse or recommend any investments based on this information. Investors should consider their financial situation, investment goals, and risk tolerance before making any decisions. Consulting a qualified financial advisor is recommended. JPost.com is not liable for any investment losses from using this information. The information provided is for educational purposes only and should not be considered as trading or investment advice.

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