Stock Markets And Gold Price Calm Down After US Presidential Election

Wednesday, November 9, 2016

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The scenario that many people feared—the potential for an extended US Presidential Election battle after the polls on Tuesday—has failed to materialize. Although many anticipated a Donald Trump victory to send the markets into chaos (with Dow Futures plummeting late last night), this morning has seen a general calming of both stock markets and gold prices.

But how is the gold pricing looking in the aftermath now that we’re well into US trading hours the day after an important election? Let’s take a closer look.

Gold Price “Cooling Off” After Elections, Still Up

Business Insider characterized the movement of gold as a “cool off.” While gold prices looked slated to climb back well into the $1,300 range—as they did after a controversial Brexit vote—there’s no doubt that the price has calmed down. As of this writing, the price of gold is in the upper $1,200 range, at about $1,278, which shows just how much events have calmed down after the initial shocks over the US Presidential Campaign.

One of the biggest influences over the price of gold appears to be the success f the stock market. Although Dow Futures late last night looked poised to collapse, many investors clearly recognized it as a buying opportunity. We see that in the state of the Dow now, which is back in the mid-18,000 range.

Why Isn’t A Safe Haven Investment Doing Better?

Because gold is frequently seen as one of the most popular “safe haven” investments out there, there might be some wondering why it’s not performing even better after an upset in the Presidential Election.

The first answer appears to be that stock markets aren’t as spooked as it initially appeared last night. After Brexit, stock markets were down temporarily - but it appears the Dow Jones Industrial Average and the S&P500 aren’t seeing a lot of “shock” movement as anticipated. This maintains confidence in the markets, putting less upward pressure on the stock market.

What’s In The Cards For Gold Now?

Of course, any talk of gold cooling off may be temporary. Although many investors appear optimistic that gold can hold on to its current price - and maybe even move up between now and the end of 2016.  To be sure there is always a chance that stock market investors could lose confidence, which in turn would have material effects on the price of gold.

According to MarketWatch, many are “ready for a wild ride” after the Trump win. This article, published this morning, points out just how quickly US markets have moved when looking at the futures overnight to the current state of the stock market prices now in trading hours. Noting that markets fared “surprisingly well” after the Earth-shattering Brexit vote, Francine McKenna wrote today that the problems “haven’t instilled confidence in the ability of the market to handle turmoil.”

Whether or not that translates into less confidence in the stock market this week is anyone’s guess. But for right now, the price of gold is surprisingly stable, reflecting more confidence in the market that many would have thought.

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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.

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