What Biden’s victory means for gold prices

When Obama took office as president of the United States in January 2009, gold was trading a little over $890. At the end of his first term, the Precious metal was up about 88.6% at $1,685. While his first four years benefited metal greatly, Obama’s second term proved more volatile. Gold went from $1,685 in 2013 to roughly $1,195 in 2017, a decrease of 28.9%. 

Throughout the Trump presidency, the value of gold rose 34%. Since November 2016, the yellow metal gradually increased from $1,183 an ounce to around $1,900 a month before the recent November 3 presidential election.

On November 6, once it was known who had won the election, the price of gold remained at a 7-week high at $1,960, while the Fed urged fiscal stimulus.

Analysts think gold prices will increase in the medium term

Brent Cook, Co-Editor Exploration Insights, stated that a Democratic victory would have little effect on the value of gold, as Biden will have other problems to contend with, citing other catalysts that stimulate the price of gold.

The most significant factor that can affect the price of the yellow metal is the availability of the Covid-19 vaccine. It will push the US economy back to normal, adding $100 or more to the price of gold. 

Other analysts say that Biden’s presidency is an impediment for the yellow metal, especially the transition period, which generally causes volatility and fluctuations in the market. They added that with Biden elected, markets would react negatively since they don’t like change. It is good for gold demand; however, this will likely return to normal at some point.

Danielle DiMartino, the critic and chief strategist of the United States Federal Reserve, hopes that the current political and social landscape will benefit gold. She sees a great possibility of social unrest. According to DiMartino, a Trump presidency is considered friendly for riskier assets, including the yellow metal. Meanwhile, Biden can lead to the destruction of monopolies, hurting gold earnings. The fiscal stimulus and the national debt is a priority in the United States, affecting gold prices violently.

During the current period, favorable conditions for the yellow metal prices are low-interest rates, money printing, trade war, civil unrest in many states, inflation, and most importantly, the reappearance of the coronavirus in the winter.

However, gold prices are more influenced by other factors, particularly the US dollar and bond yields. Financial markets generally prefer certainty. So, this scenario could support the price of the yellow metal, at least in the medium term.