Projecting Where Gold Prices Go Before The Election

Friday, October 21, 2016

gold prices

Wednesday’s Presidential debate may not have made up a lot of minds politically, but it certainly will have ramifications across the world. This includes the economy and, yes, the price of gold. Early market returns this morning suggest that gold may be one of the few sources of optimism after that debate -and there are some who think that may be the case for investments all the way up until the election.

Projecting the price of gold is never easy. But there are plenty of opportunities between now and the election to consider how the price of gold may react to an uncertain market. Let’s break down what we have to look forward to until Nov. 8th.

Analysts Predict Economic Uncertainty That Could Favor Gold Prices

According to an article published in UK’s This Week, there’s potential that gold prices could “ride” the wave of uncertainty expected to plague the world between now and the U.S. presidential election. How so? In times of economic uncertainty, hedges like gold tend to draw more demand from investors with a lot of money to lose, or to gain, in these uncertain times.

With current prices hovering in the lower $1,270’s - subject to quick change from Thursday morning’s results - gold is primed for a gain on the week.

This Week reports that investors in Europe are waiting to hear from the European Central Bank today on the results from a meeting that could shape economic policy in the coming months. As regular readers here know, the role of central banks in shaping the value of currencies has a dramatic role on the price of gold itself.

Understanding The Coming Weeks In Gold And In The Economy

If investors are waiting on uncertainty, watching meetings like the ECB will be vital. But even more vital will be the economic news coming out of the United States.

InvestorPlace.com mentions that FOMC (Federal Open Market Committee) policy announcements, GDP announcements, Labor announcements, and other factors can heavily weigh on the economic climate. The FOMC, of course, refers to the Federal Reserve meetings. The next meeting on the schedule here is November 1st and 2nd, just one week before the U.S. election. (More meetings will be held in December, which may be even more vital than the November meetings).

It seems likely that uncertain economic data until then will rule the financial news, which puts gold in a fairly solid position to hold on to the gains it made this week. A steep rise or fall in the price of gold from now until the election seems unlikely without extenuating circumstances.

What does this mean for the average investor? It may be time to prepare for what happens beyond the U.S. election. If you believe gold prices will head up after the election, there may be no significant “dip” in gold prices to buy before then. It seems the world is holding its breath until the U.S. election comes and goes. If that holds up, expect gold prices to look similar to where they hold today. 

Darren Capriotti

Darren Capriotti has been a market analyst for the past decade and is an expert in precious metals. He prides himself on his ability to analyze the market and offer true value to investors with questions about gold, silver, and other precious metals. Highly educated, incredibly passionate, and more accurate than most, Darren offers a true, unbiased look into what investors can expect in the precious metals market. You can reach Darren at dcapriotti@gold-eagle.com.