The 2024 U.S. presidential election is approaching quickly and everyone’s wondering how the outcome might impact financial markets, including the price of gold. Of course, many factors influence gold prices, but political shifts can create some ripple effects.
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GOBankingRates spoke to experts to find out how a Trump win could potentially affect gold prices.
Political Uncertainty and Market Volatility
Matthew Jones, precious metals analyst at Solomon Global, believes that any major political change can create uncertainty in financial markets. “Uncertainty often leads to volatility, and both are known to be big price drivers for gold,” he said.
Jones points out that Trump is known for his divisive nature and that there is “concern and uncertainty around his economic, inflation and monetary policies.”
Trump’s Economic Policies and Gold
Trump’s approach to deregulation might affect investor confidence. And their confidence, or lack of it, could have an impact on gold prices. Jones thinks a Trump win could lead to “a mix of policy-driven uncertainty, inflation, and geopolitical risks,” which could increase the demand for gold as a safe-haven asset. This higher demand would mean a higher price.
Brandon Thor, CEO of Thor Metals Group, offered a more nuanced perspective. He believes that a Trump victory would initially “breathe optimism into the markets as Wall Street knows Trump is staunchly pro-business.” This could lead to a temporary dip in gold prices and an increase in stock values. Thor also believes that underlying economic issues won’t disappear overnight.
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The Debt and Inflation Factor
“We are still sitting on a currency that has been printed with reckless abandon and a national debt that is untenable to say the least,” Thor said. He argues that the market gains during Trump’s previous term were partly due to “artificial reasons” such as stimulus checks and debt accumulation, which may need to be corrected.
Thor suggests that Trump’s options for preventing a market correction would be limited. “Trump’s only defenses against a market correction are bullying the Fed into lowering rates or pumping money into the market in an effort to stimulate it,” he said. However, Thor warns that such actions could lead to a crash in the dollar’s value and accelerate inflation.
Monetary Policy and Dollar Weakness
David Materazzi, CEO at Galileo FX, has views that largely align with Jones’ and Thor’s on how Trump’s plans could crank up inflation. “His love for loose monetary policy, relentless spending, and pushing the economy into overdrive will ignite inflation, weakening the dollar,” he said. He added that when the dollar sinks, gold typically rises in value.
Geopolitical Tensions and Gold Demand
Materazzi also points to geopolitical factors, saying that “the chaos his trade wars and geopolitical tensions cause – uncertainty always drives people to gold.” He admits stocks might get a temporary boost from deregulation and tax cuts. But ultimately, Materazzi believes the national debt will continue to rise, which will fuel more long-term gold demand.
Julia Khandoshko, CEO at Mind Money, agreed that Trump’s victory may increase global instability. “His projects to combat migration, China, and interference in European politics will support gold,” Khandoshko said. Again, all of this will mean higher gold prices.
Federal Reserve Pressure and Interest Rates
Khandoshko also points out that even though the Fed is supposed to be its own boss, Trump might push harder for lower rates than the Dems would. This could create tension between the government and the Federal Reserve, possibly creating doubt around the stability of the U.S. dollar. When a currency seems unstable, people tend to turn to gold instead.
If Trump successfully lowers interest rates, that could also fuel demand for gold. If interest rates are too low, investors might prefer gold to keeping their money elsewhere.
Historical Patterns and Future Uncertainties
Jonathan Rose, founder of Prepper Bar and CEO of Genesis Gold Group, said that history doesn’t always play reruns. He pointed out that during Trump’s last term in the White House, gold prices took a leap. This might’ve been thanks to Trump’s trade disputes with China, along with some other strained international relationships.
So, if Trump wins again, could gold prices go up? Maybe, although Materazzi believes that no matter who wins in November, gold prices will continue to rise.
Regardless, guessing where the market’s headed is like trying to predict the weather — and maybe even more complicated. Gold prices are dependent on many factors, not just American politics, and there are usually too many moving parts to make accurate predictions.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: How Trump Winning the Election Could Affect Gold Prices
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
